Blue Dog Cafe has sales of $1,600,000 COGS 40% of sales, operating expenses $460,000, interest expense $20,000, depreciation expense $48,000. Tax rate 40%. Dividend payout ratio is 60%. They expect to grow at a rate of 15%. Keep interest and depreciation expense at the current amount as they will not increase. Their balance sheet has the below amounts:
Cash $40,000 AR 20,000 Inventory 16,000 Fixed assets $2,200,000
AP 18,000 Notes Payable 20,000 Accruals 23,000 Common stock (stays the same) 800,000 Retained earnings $204,000.
1. What is their expected retained earnings for this next year?
2.If they are at capacity and have a need for fixed assets, what will their external funds requirement (AFN) be?
3. List two ways how they might go about obtaining those funds needed
4. If they are at 80% capacity, do they have an external funds requirement now? Yes or no.