Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bohemian Manufacturing Company reported sales of $890,000 at the end of last year; but this year, sales are expected to grow by 8%. BMC

image text in transcribed

Bohemian Manufacturing Company reported sales of $890,000 at the end of last year; but this year, sales are expected to grow by 8%. BMC expects to maintain its current profit margin of 24% and dividend payout ratio of 20%. The firm's total assets equaled $500,000 and were operated at full capacity. BMC's balance sheet shows the following current liabilities: accounts payable of $65,000, 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? -$177,732 -$185,460 -$154,550 -$170,005 A positively signed AFN value represents a point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements. a shortage of internally generated funds that must be raised outside the company to finance the company's 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, BMC is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can BMC pay to shareholders without needing to raise any external capital? (Hint: What can BMC increase its dividend payout ratio to before the AFN becomes positive?) 60.9 82.6 87.0 78.3

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Derivatives And Risk Management

Authors: Don M. Chance, Robert Brooks

10th Edition

130510496X, 978-1305104969

More Books

Students also viewed these Finance questions

Question

Name and summarize the goals of compensation professionals.

Answered: 1 week ago