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tobin supplies company expects sales next year to be $330,000. inventory and accounts receivable will increase $75,000 to accommodate this sales level. the company has a steady profit margin of 25 percent with a 25 percent dividend payout. how much external financing will tobin supplies company have to seek? assume there is no increase in liabilities other than that which will occur with the external financing.

Answer :

KhiradAfaq

Net earnings (NI), additionally known as internet profits, is calculated as income minus fee of products sold, selling, popular and administrative fees, running fees, depreciation, interest, taxes, and different fees.

The required details for Net earnings in given paragraph

Net income margin=Net earnings/Sales

Hence internet earnings=($330,000*25%)=$82500

Hence addition to retained profits=Net earnings(1-dividend payout ratio)' =$82500(1-0.25)=$61875

Hence outside financing needed=Increase in assets-Addition to retained profits

that's same to

=($75000-$61875)

=13125.

It is a beneficial wide variety for traders to evaluate how lots sales exceeds the fees of an organization. This wide variety seems on a company's earnings announcement and is likewise a trademark of a company's profitability. Businesses use internet earnings to calculate their profits according to share. Business analysts frequently discuss with internet earnings as the lowest line considering it's far at the lowest of the earnings announcement.

Analysts within side the United Kingdom know NI as income as a consequence of shareholders.

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