Problem 12-02
AFN equation
Broussard Skateboard's sales are expected to increase by 20%
from $8.4 million in 2016 to $10.08 million in 2017. Its assets
totaled $4 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 4%, and the forecasted payout ratio is 75%. What
would be the additional funds needed? Do not round intermediate
calculations. Round your answer to the nearest dollar.
$_______
Assume that an otherwise identical firm had $5 million in total assets at the end of 2016. Broussard's capital intensity ratio (A0*/S0) is (Higher, Lower, or Equal to?) than the otherwise identical firm; therefore, Broussard is (Less, more, eqaul to?) capital intensive - it would require (a smaller, a larger, the same?)increase in total assets to support the increase in sales.
PLEASE ANSWER THE BOLD QUESTIONS IN PARENTHESES
Problem 12-02 AFN equation Broussard Skateboard's sales are expected to increase by 20% from $8.4 million...
Problem 12-02 AFN equation Broussard Skateboard's sales are expected to increase by 15% from $7.0 million in 2016 to $8.05 million in 2017. Its assets totaled $6 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...
Problem 12-02 AFN equation Broussard Skateboard's sales are expected to increase by 15% from $7.0 million in 2016 to $8.05 million in 2017. Its assets totaled $4 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...
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