3 More on the AFN (Additional Funds Needed) equation Blue Elk Manufacturing reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 8 Blue Elk expects to maintain its current profit margin of 22 and dividend payout ratio of 10 The following information was taken from Blue Elks balance sheet Total assets $450,000 Accounts payable $65,000 Notes payable $35,000 Accrued liabilities $60,000 Based on the AFN equation, the firms AFN for the current year is A positively signed AFN value represents a point at which the funds generated within the firm equal the demands for funds to finance the firms future expected sales requirements a shortage of internally generated funds that must be raised outside the company to finance the companys forecasted future growth a surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends Because of its excess funds, Blue Elk Manufacturing is thinking about raising its dividend payout ratio to satisfy shareholders Blue Elk could pay out of its earnings to shareholders without needing to raise any external capital ( Hint What can Blue Elk increase its dividend payout ratio to before the AFN becomes positive )

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3. More on the AFN (Additional Funds Needed) equation Blue Elk Manufacturing reported sales of $775,000 at the end of last year, but this year,

3. More on the AFN (Additional Funds Needed) equation

Blue Elk Manufacturing reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 8%. Blue Elk expects to maintain its current profit margin of 22% and dividend payout ratio of 10%. The following information was taken from Blue Elks balance sheet:

Total assets:	$450,000
Accounts payable:	$65,000
Notes payable:	$35,000
Accrued liabilities:	$60,000

Based on the AFN equation, the firms AFN for the current year is ._______?

A positively signed AFN value represents:

a point at which the funds generated within the firm equal the demands for funds to finance the firms future expected sales requirements.
a shortage of internally generated funds that must be raised outside the company to finance the companys forecasted future growth.
a surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends.

Because of its excess funds, Blue Elk Manufacturing is thinking about raising its dividend payout ratio to satisfy shareholders. Blue Elk could pay out _________ of its earnings to shareholders without needing to raise any external capital. (Hint: What can Blue Elk increase its dividend payout ratio to before the AFN becomes positive?)