Homework Answers
AFN = ((current level of total assets - current level of current liabilities excluding notes payable) * % increase in sales) - (next year sales * net profit margin * retention ratio)
net profit margin = net income / sales = $500,000 / $13,500,000 = 3.70%
retention ratio = 1 - dividend payout ratio = 1 - 35% = 65%
next year sales = current year sales * (1 + % growth in sales)
next year sales = $13,500,000 * (1 + 19%) = $16,065,000
AFN = (($3,000,000 - ($500,000 - $100,000)) * 19%) - ($16,065,000 * 3.70% * 65%)
AFN = $107,250
Total increase in assets supplied by spontaneous liabilities = current level of current liabilities excluding notes payable * % increase in sales
Total increase in assets supplied by spontaneous liabilities = ($500,000 - $100,000) * 19%
Total increase in assets supplied by spontaneous liabilities = $76,000
income generated from operations that will be added to retained earnings = next year sales * net profit margin * retention ratio
income generated from operations that will be added to retained earnings = $16,065,000 * 3.70% * 65%
income generated from operations that will be added to retained earnings = $386,750
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3. The Additional Funds Needed (AFN) equation Bohemian Manufacturing Company has the following end-of-year balance sheet:...
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Drop-down options: (dollar value), (percentage) 3. More on the AFN (Additional Funds Needed) equation Bohemian Manufacturing...
Drop-down options: (dollar value), (percentage)
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The Additional Funds Needed (AFN) equation
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Blue Elk Manufacturing has the following end-of-year balance sheet: Blue Elk Manufacturing Balance Sheet For the...
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Bohemian Manufacturing Company reported sales of $820,000 at the end of last year, but this year,...
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Green Caterpillar Garden Supplies Inc. has the following end-of-year balance sheet: Green Caterpillar Garden Supplies Inc....
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1. The Additional Funds Needed (AFN) equation Blue Elk Manufacturing has the following end-of-year balance sheet: Blue Elk Manufacturing Balance Sheet For the Year Ended on December 31 Liabilities Assets Current Assets: Current Liablities: Accounts payable Cash and equivalents $150,000 $250,000 Accounts receivable Accrued liabilities 400,000 150,000 Notes payable 350,000 Inventories 100,000 Total Current Assets $900,000 Total Current Liabilities $500,000 Net Fixed Assets: Long-Term Bonds 1,000,000 Net plant and equipment $2,100,000 Total Debt $1,500,000 (cost minus depreciation) Common Equity Common...
1. The Additional Funds Needed (AFN) equation Green Moose Company has the following end-of-year balance sheet: Green Moose Company Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents $150,000 Accounts payable $250,000 Accounts receivable 400,000 Accrued liabilities 150,000 Inventories 350,000 Notes payable 100,000 Total Current Assets $900,000 Total Current Liabilities $500,000 Net Fixed Assets: Long-Term Bonds 1,000,000 Net plant and equipment $2,100,000 Total Debt $1,500,000 (cost minus depreciation) Common Equity Common...
2. The Additional Funds Needed (AFN) equation Green Moose Industries has the following end-of-year balance sheet: Green Moose Industries Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Accounts payable $250,000 Cash and equivalents Accounts receivable Accrued liabilities 150,000 $150,000 400,000 350,000 $900,000 Inventories Notes payable Total Current Liabilities Long-Term Bonds Total Debt 100,000 $500,000 1,000,000 Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) $2,100,000 $1,500,000 Common Equity Common...
Drop-down options: (dollar value), (percentage)
3. More on the AFN (Additional Funds Needed) equation Bohemian Manufacturing Company reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 6%. Bohemian expects to maintain its current profit margin of 24% and dividend payout ratio of 10%. The following information was taken from Bohemian's balance sheet: $500,000 Total assets: Accounts payable: Notes payable: Accrued liabilities: $70,000 $30,000 $80,000 Based on the AFN equation, the...
Bohemian Manufacturing Company reported sales of $820,000 at the end of last year, but this year, sales are expected to grow by 10%. Bohemian expects to maintain its current profit margin of 21% and dividend payout ratio of 10%. The following information was taken from Bohemian's balance sheet: Total assets: Accounts payable: Notes payable: Accrued liabilities: $400,000 $70,000 $35,000 $65,000 Based on the AFN equation, the firm's AFN for the current year is A positively signed AFN value represents: O...
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...
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 $150,000 Accounts payable Accounts receivable 400,000 Accrued liabilities Inventories 350,000 Notes payable Total Current Assets $900,000 Total Current Liabilities Net Fixed Assets: Long-Term Bonds Net plant and equipment $2,100,000 Total Debt (cost minus depreciation) Common Equity Common stock Retained eamings Total Common Equity Total Assets $3,000,000...
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