The most recent financial statements for Dockett, Inc., are shown here

The most recent financial statements for Dockett, Inc., are shown here (assuming no income taxes):

Income Statement				Balance Sheet
Sales	$	7,500		Assets	$	15,800		Debt	$	6,300
Costs		5,410						Equity		9,500
Net income	$	2,090		Total	$	15,800		Total	$	15,800

Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $9,075.

What is the external financing needed? (Round your answer to 2 decimal places. (e.g., 32.16))

External financing needed

$

Explanation:

An increase of sales to $9,075 is an increase of:

Sales increase	=	($9,075 – 7,500) / $7,500
Sales increase	=	0.21, or 21%

Assuming costs and assets increase proportionally, the pro forma financial statements will look like this:

Pro forma income statement				Pro forma balance sheet
Sales	$	9,075.00		Assets	$	19,118.00		Debt	$	6,300.00
Costs		6,546.10						Equity		12,028.90
Net income	$	2,528.90		Total	$	19,118.00		Total	$	18,328.90

If no dividends are paid, the equity account will increase by the net income, so:

Equity	=	$9,500 + 2,528.90
Equity	=	$12,028.90

So the EFN is:

EFN	=	Total assets – Total liabilities and equity
EFN	=	$19,118 – 18,328.90
EFN	=	$789.10