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(Solved by Expert Tutors) The Landis Corporation had 2009 sales of$204 million. The balance>


sheet items that vary directly with sales and the profit margin are as follows:PercentCash 6%Accounts receivable 11%Inventory 18%Net fixed assets 39%Accounts payable 17%Accruals 6%Profit margin after taxes 5%The dividend payout rate is 50 percent of earnings, and the balance in retained earnings at the end of 2009 was$73.0 million.Common stock and the company?s long-term bonds are constant at $10 million and $5 million, respectively. Notes payable are currently $16 million.a.How much additional external capital will be required for next year if sales increase12percent.(Assume that the company is already operating at full capacity.)b.What will happen to external fund requirements if Landis Corporation reduces the payout ratio, grows at a slower rate, or suffers a decline in its profit margin? Discuss each of these separately.c.Prepare a pro forma balance sheet for 2010 assuming that any external funds being acquired will be in the form of notes payable. Disregard the information in part b in answering this question (that is, use the original information and part a in constructing your pro forma balance sheet).

 

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Apr 19, 2020

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