Question

Problem 12-01 AFN equation Broussard Skateboard's sales are expected to increase by 25% from $7.0 million in 2016 to $8.75 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 70%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Round your answer to the nearest dollar. Do not round intermediate calculations.

Answer 1

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BOND- Microsoft Excel (Product Activation Failed) Page Layout File Home Insert Formulas Data Review View Add-Ins E AutoSum - Cut Wrap Text General Calibri 11 Copy Fill Merge & Center Insert Delete Format Paste в IU* 000 Conditional Format Cell Sort & Find & % Format Painter Clear Filter Select Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fox D847 C D E F G H 847 848 849 BROUSSARD 850 INCREASE IN SALES (%) = 25% 30% [payout ratio 70% 851 RETENTION RATIO = 852 PROFIT MARGIN = 5% 853 1 INCREASE IN ASSETS NECESSARY TO SUPPORT INCREASE IN SALES = INCREASE IN SALES X TOTAL ASSETS 854 25% X 5000000 1250000 855 856 2 INCREASE IN LIABILITIES NECESSARY TO SUPPORT INCREASE IN SALES = INCREASE IN SALES X TOTAL SPONTANEOUS LIABILITIES 857 ACCOUNTS PAYABLE +ACCRUED LAIBILITIES OTHER PAYABLES 25% X 900000 858 225000 859 3 PROFIT MARGIN = 5% 860 437500 NET INCOME = 8750000 X 5% = 131250 861 SO ADDITION TO RETAINED EARNINGS = 30% 862 4 AFN INCREASE IN ASSETS - INCREASE IN LAIBILTIES - INCREASE IN RETAINED EARNINGS 863 864 ANS AFN 1-2-3 893750 865 Sheet2 AFN BANKING NOTE S1S3 LP, IP, MRP, INFLATION YIELD SPOT S10 EUAC AW LIFE S4 $5 WARRANT refund CLEAN PRICE BIDDING, UNDERWRITING 130% erences: U98 W 00:52 ENG 23-11-2019