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Green Caterpillar Garden Supplies Inc. has the following end-of-year balance sheet: Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities Cash and equivalents Accounts receivable Inventories 150,000 Accounts payable $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 400,000 350,000 $900,000 Accrued liabilities Notes payable Total Current Assets Total Current Liabilities Net Fixed Assets: Long-Term Bonds Net plant and equipment (cost minus depreciation) $2,100,000 Total Debt Common Equity Common stock 800,000 700,000 $1,500,000 $3,000,000 Retained earnings Total Common Equity Total Assets $3,000,000 Total Liabilities and Equity The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Green Caterpillar Garden Supplies Inc. generated $350,000 net income on sales of $12,500,000. The firm expects sales to increase by 18% this coming year and also expects to maintain its long-run dividend payout ratio of 30%.Suppose Green Caterpillar Garden Supplies Inc.s assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Green Caterpillar Garden Supplies Inc.s expected sales. O $540,000 O $594,000 O $621,000 O $567,000 When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Green Caterpillar Garden Supplies Inc. this year? O $72,000 O $75,600 O $68,400 O $64,800When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Green Caterpillar Garden Supplies Inc. this year? O $72,000 O $75,600 O $68,400 O $64,800 In addition, Green Caterpillar Garden Supplies Inc. is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise externally from the capital markets. Assume that the firms profit margin and dividend payout ratio are expected to remain constant. Given the preceding information, Green Caterpillar Garden Supplies Inc. is expected to generate $ from operations that will be added to retained earnings. According to the AFN equation and projections for Green Caterpillar Garden Supplies Inc., the firms AFN is $

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Home nert Page Layout Formulas Data Review View dd-Ins Cut Copy 11.A. A.--- 9- ー E ゴText ずWrap Text General Conditional Fomat yell Inserta Formatぶutos mh A チFormat Painter B l U. ㄧ˙ タ.Δ. -=- 還便困Merge & Center. $,%, ,,o Conditional Format Cell Insert Delete Format 2 ClearFe Select Edting as Table Styles Clipboard Alignment Number er Cells F611 611 612 NET INCOME 613 DIVIDEND PAYOUT 614 PROFIT MARGIN NET INCOME/SALES 100 350000/12500000*100- 615 SALES 12500000 30% 2.80% 1 INCREASE IN ASSETS NECESSARY TO SUPPORT INCREASE IN SALES INCREASE IN SALES X TOTAL ASSETS 617 618 6192 INCREASE IN LIABILITIES NECESSARY TO SUPPORT INCREASE IN SALES INCREASE IN SALES X TOTAL ASSETS 620 621 622 623 624 625 626 627 628 629 3000000 X 18 % 540000 ACCOUNTS PAYABLE + ACCRUED LAI BILITIES = 400000 X 18% 72000 3 CATERPILLAR IS EXPECTED TO GENERATE 289100 INCOME FROM OPERATIONS THAT WILL BE ADDED TO RETAINED EARNINGS PROFIT MARGIN-2.80% NET INCOME = LESS DIVIDEND PAYOUT (30%) SO ADDITION TO RETAINED EARNINGS 12500000(1+0.18) x 2.8% 123900 289100 4 AFN-INCREASE IN ASSETS- INCREASE IN LIBILTIES-INCREASE IN RETAINED EARNINGS AFN = 540000-72000-289100- 178900.00 SPOT Sheet2 AFN BANKING NOTE BIDDING, UNDERWRITING ELAC A N PM LIFE LP I MRP INFLATION YIELD WARRANT fund bond CLEAN INVOICE PRICE A rences: GB150 福 130% 04:41 0-01-2019

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