Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next.
Universal Products Company
Financial Statements, 2021 and Pro Forma 2022 ($ thousands)
INCOME STATEMENT
Actual Forecast
2021 2022
Sales $ 8,700 $ 9,100
Cost of goods sold 6,600 7,100
Operating expense 700 700
Depreciation expense 250 260
Interest expense 90 200
Earnings before tax 1,060 840
Tax 371 294
Net income $ 689 $ 546
Universal Products Company
Financial Statements, 2021 and Pro Forma 2022 ($ thousands)
BALANCE SHEET
Actual Forecast
2021 2022
Current assets $ 4,200 $ 4,450
Net fixed assets 3,000 Total assets $ 7,200 Current liabilities $ 1,190 $ 1,310
Long-term debt 700 500
Owner’s equity 5,310 Total liabilities & equity $ 7,200 Assume that Universal plans to purchase $700,000 in fixed assets during 2022 and to dispose of no fixed assets during 2022. What would be its forecast for net fixed assets in 2022?
Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner’s equity in 2022?
Given the assumptions in questions (a) and (b), what is Universal’s projected external funding required for 2022?