Forthe next scal year you orecast net income o 49600 Your f

Forthe next scal year you orecast net income o $49,600 . Your firm\'s payout r o is accounts payable are forecasted to increase by $10,500. What is your net new financing needed for next year? and ending assets of $506,400 10.4%. Your beginning stockholders\' equity IS $297 700 and your beginning total liabilities are $120,500. Your non-debt lia bilities such as

Solution

Financing of a firm comes from equity or debt or from both.

Financing required = Assets – [Ending equity + Ending liabilities]

                                = 506,400 – [{Beginning equity + Net income × (1 – payout ratio)} + (Beginning liability + Increasing payable)]

                                = 506,400 – [{297,700 + 49,600× (1 – 0.104)} + (120,500 + 10,500)]

                                = 506,400 – (342,141.60 + 131,000)

                                = 506,400 – 473,141.60

                                = $33,258.40 (Answer)