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Carter Paint Company has plants in four provinces. Sales last year were $ 1 0 0 million, and the balance sheet at year - end
Carter Paint Company has plants in four provinces. Sales last year were $ million, and the balance sheet at yearend is similar in percent of sales to that of previous years and this will continue in the future All assets and current liabilities will vary directly with sales. Assume the firm is already using capital assets at full capacity.
Balance Sheet
in $ millions
Assets Liabilities and Shareholders' Equity
Cash $ Accounts payable $
Accounts receivable Accrued wages
Inventory Accrued taxes
Current assets Current liabilities
Capital assets Longterm debt
Common stock
Retained earnings
Total assets $ Total liabilities and shareholders' equity $
The firm has an aftertax profit margin of percent and a dividend payout ratio of percent.
a If sales grow by percent next year, determine how many dollars of new funds are needed to finance the expansion. Do not round intermediate calculations. Enter the answer in millions. Round the final answer to decimal places.
The firm needs $
million in external funds.
b Prepare a pro forma balance sheet with any financing adjustment made to longterm debt. Do not round intermediate calculations. Input all answers as positive values. Be sure to list the assets and liabilities in order of their liquidity. Enter the answers in millions. Round the final answers to decimal places.
Balance Sheet
$ millions
Assets Liabilities and Shareholders' Equity
Cash
$
Accounts payable
$
Accounts receivable
Accrued wages
Inventory
Accrued taxes
Current assets $
Current liabilities $
Capital Assets
Longterm debt
Common stock
$
Retained earnings
Total assets $
Total liabilities and shareholders' equity
$
c Calculate the current ratio and total debt to assets ratio for each year. Do not round intermediate calculations. Round the final answers to decimal places.
Year Year
Current ratio
X
X
Total debt assets
Carter Paint Company has plants in four provinces. Sales last year were $ million, and the balance sheet at yearend is similar in
percent of sales to that of previous years and this will continue in the future All assets and current llabilitles will vary directly with
sales. Assume the firm Is already using caplal assets at full capacity.
The firm has an aftertax profit margin of percent and a dividend payout ratio of percent.
a If sales grow by percent next year, determine how many dollars of new funds are needed to finance the expansion. Do not
round Intermedlate calculations. Enter the answer In milllons. Round the final answer to decimal places.
The firm needs $ million in external funds.
b Prepare a pro forma balance sheet with any financing adjustment made to longterm debt. Do not round Intermeclate
calculatlons. Input all answers as positlve values. Be sure to llst the assets and llabillties In order of thelr llquidity. Enter the
answers In millions. Round the final answers to decimal places.
c Calculate the current ratio and total debt to assets ratio for each year. Do not round Intermedlate calculatlons. Round the final
answers to decimal places.
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