The table given below summarizes the 2002 income statement and end-year balance sheet of Tims...
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Finance
The table given below summarizes the 2002 income statement and end-year balance sheet of Tims Bowling Alleys. Tim's financial manager forecasts a 10% increase in sales and costs in 2003. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year.
Income Statement
$ in thousands
Sales
$ 1,000
(40% of average assets)a
Costs
750
(75% of sales)
Interest
25
(5% of debt at start of year)b
Pretax profit
225
Tax
90
(40% of pretax profit)
Net income
$ 135
aAssets at the end of 2001 were $2,400,000.
bDebt at the end of 2001 was $500,000.
Balance Sheet
$ in thousands
Net assets
$ 2,600
Debt
$ 500
Equity
2,100
Total
$ 2,600
Total
$ 2,600
What is the implied level of assets at the end of 2003?
Note: Enter your answer in dollars not in thousands.
If the company pays out 50% of net income as dividends, how much cash will Tim need to raise in the capital markets in 2003? Assumes debt remains constant.
Note: Enter your answer in dollars not in thousands.
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