Question
A. Green Caterpillar Garden Supplies Inc. reported sales of $743,000 at the end of last year; but this year, sales are expected to grow by
A.
Green Caterpillar Garden Supplies Inc. reported sales of $743,000 at the end of last year; but this year, sales are expected to grow by 8%. Green Caterpillar expects to maintain its current profit margin of 24% and dividend payout ratio of 20%. The firm's total assets equaled $425,000 and were operated at full capacity. Green Caterpillar's balance sheet shows the following current liabilities: accounts payable of $80,000, notes payable of $25,000, and accrued liabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm's AFN for the coming year?
B.
Because of its excess funds, Green Caterpillar is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Green Caterpillar pay to shareholders without needing to raise any external capital?
please help me to solve for A and B.
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