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Blue Elk Manufacturing has the following end - of - year balance sheet: Blue Elk Manufacturing Balance Sheet For the Year Ended on December 3
Blue Elk Manufacturing has the following endofyear balance sheet:
Blue Elk Manufacturing
Balance Sheet
For the Year Ended on December
Assets Liabilities
Current Assets: Current Liabilities:
Cash and equivalents $ Accounts payable $
Accounts receivable Accrued liabilities
Inventories Notes payable
Total Current Assets $ Total Current Liabilities $
Net Fixed Assets: LongTerm Bonds
Net plant and equipmentcost minus depreciation $ Total Debt $
Common Equity
Common stock
Retained earnings
Total Common Equity $
Total Assets $ Total Liabilities and Equity $
The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Blue Elk Manufacturing generated $ net income on sales of $ The firm expects sales to increase by this coming year and also expects to maintain its longrun dividend payout ratio of
Suppose Blue Elk Manufacturings assets are fully utilized. Use the additional funds needed AFN equation to determine the increase in total assets that is necessary to support Blue Elk Manufacturings expected sales.
$
$
$
$
When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Blue Elk Manufacturing this year?
$
$
$
$
In addition, Blue Elk Manufacturing is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise externally from the capital markets. Assume that the firms profit margin and dividend payout ratio are expected to remain constant.
Given the preceding information, Blue Elk Manufacturing is expected to generate
$
from operations that will be added to retained earnings.
According to the AFN equation and projections for Blue Elk Manufacturing, the firms AFN is
$
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