The most recent financial statements for Fleury Inc., follow. Sales for 2015 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales.
FLEURY, INC.
2014 Income Statement
Sales $ 757,000
Costs 592,000
Other expenses 13,000
Earnings before interest and taxes $ 152,000
Interest paid 15,000
Taxable income $ 137,000
Taxes (20%) 27,400
Net income $ 109,600
Dividends $ 21,920
Addition to retained earnings 87,680
FLEURY, INC.
Balance Sheet as of December 31, 2014
Assets Liabilities and Owners’ Equity
Current assets Current liabilities
Cash $ 21,640 Accounts payable $ 55,800
Accounts receivable 33,960 Notes payable 15,000
Inventory 70,920 Total $ 70,800
Total $ 126,520 Long-term debt $ 140,000
Fixed assets Owners’ equity
Net plant and equipment $ 490,000 Common stock and paid-in surplus $ 126,000
Retained earnings 279,720
Total $ 405,720
Total assets $ 616,520 Total liabilities and owners’ equity $ 616,520
If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 25 percent growth rate in sales? (Do not round intermediate calculations.)