Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bohemian Manufarturinn Comnanu Daluman ol The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming yean In

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Bohemian Manufarturinn Comnanu Daluman ol The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming yean In the year that just ended, Bohemian Manufacturing Company generated $500,000 net income on sales of $13,000,000. The firm expects sales to increase by 17% this coming year and also expects to maintain its long-run dividend payout ratio of 30%. Suppose Bohemian Manufacturing Company's assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Bohemian Manufacturing Company's expected sales. (Note: Do not round intermediate calculations.) $612,000$510,000$484,500$561,000 When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous llabilitios are a source of capital that the firm wir generate internally, so they reduce the need for external capital. How much of the total increose in assets will be supplied by spontaneous liabiisies for Bohemian Manufacturing Company this year? (Note: Do not round intermedlote calculations.) 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 Bohemian Manufacturing Company this year? (Note: Do not round intermediate calculations.) $81,600$74,800$68,000$64,600 In addition, Bohemian Manufacturing Company 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 firm's profit margin and dividend payout ratio are expected to remain constant. Given the preceding information, Bohemian Manufacturing Company is expected to generate s added to retained earnings. (Note: Do not round intermediate calculations.) Given the preceding information, Bohemian Manufacturing Company is expected to generate 5 added to retained earnings. (Note; Do not round intermediate calculations.) from operations that will be According to the AfN equation and profections for Bohemian Manufacturing Company, the firm's AFN is 5 round intermedlate calculations.)

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

Liquidity Risk Management In Banks Economic And Regulatory Issues

Authors: Roberto Ruozi, Pierpaolo Ferrari

1st Edition

3642295800, 978-3642295805

More Books

Students also viewed these Finance questions