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Category > Business & Finance Posted 29 Jul 2017 My Price 8.00

Munson Communications Company

Munson Communications Company has just reported earnings for the year ended June 30, 2011. Below are the firm"s income statement and balance sheet. The company had a 55 percent dividend payout ratio for the last 10 years and does not plan to change this policy. Based on internal forecasts, the company expects the demand for its products to grow at a rate of 20 percent for the next year and has projected the sales growth for 2012 to be 20 percent. Assume that equity accounts and long-term debt do not vary directly with sales, but change when retained earnings change or additional capital is issued.

Munsun Communication Company Balance Sheet as of june 30,2011

Assets:

  

Liabilities and StockHolders" Equity

Cash

$1,728,639

Accounts Paybles

$4,666,673

Accounts receivables

3,009,421

Notes Paybles

2,507,094

Inventories

11,492,993

    

Total current assets

$16,231,054

Total Current Liabilities

$7,173,767

Net Fixed assets

22,380,636

Long term debt

13,345,242

      

Other assets

1,748,906

Common Stock

10,165,235

Total assets

$40,360,595

Retained earnings

9,676,351
   

Total Liabilities and Equity

$40,360,595

Munson Communications Company Balance Sheet as of June 30, 2011

Net sales

$ 79,722,581

Costs

59,358,499

EBITDA

$ 20,364,082

Depreciation

7,318,750

EBIT

$ 13,045,332

Interest

3,658,477

EBT

$ 9,386,855

Taxes (35%)

3,285,399

Net income

$ 6,101,456

a. What is the firm"s internal growth rate (IGR)?

b. What is the firm"s sustainable growth rate (SGR)?

c. What is the external financing needed (EFN) to accommodate the expected growth?

d. Construct the firm"s 2012 pro forma financial statements under the assumption that all external financing will be done with long-term debt.

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Status NEW Posted 29 Jul 2017 01:07 PM My Price 8.00

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