AFN Equation

Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2021 to $9.2 million in 2022. Its operating assets were $5 million at the end of 2021.

Broussard is already a full capacity, so its operating assets must grow at the same rate as projected sales. At the end of 2021, 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 6%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year.

Suppose the values for this problem change to:

Operating Assets: $5,293,861

After-Tax Profit Margin: 7.5%

Payout Ratio: 54.1%

What is the self-sustaining growth rate? You can use the formula in the textbook or use Excel's goal seek. Round your percentage to one decimal, i.e. you would enter 12.345% as 12.3.