Kizspy | Question: 18
(Choose 1 answer)
The table below is financial statement of Velapure Inc.
Velapure Inc. is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 12 percent?
A. $525
B. $1,935.20
C. $391.80
D. $210
Income Statement
Sales
$8,500
COGS
$7,210
Depreciation
$400
EBIT
$890
Interest paid
$40
Taxes
Taxable Income
Net Income
Dividend
$850
$310
$540
$330
Additional to retained earnings
$210
]
Balance Sheet
Cash
$1,700
Accounts payable
$2,175
Accounts receivable
$1,020
Long-term debt
$525
Inventory
$2,480
Common stock
$3,000
Total
$5,200$2,200
Retained earnings
$1,700
Net fixed assets
Total Assets
$7,400
Total liabilities & equity
$7,400
Π
