Question
Daniel Sawyer, the CEO of the Sawyer Group, is initiating planning for the company's operations next year, and he wants you to forecast the firm's
Daniel Sawyer, the CEO of the Sawyer Group, is initiating planning for the company's operations next year, and he wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below.
Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year's sales = S0 | $350 | Last year's accounts payable | $40 |
Sales growth rate = g | 30% | Last year's notes payable | $50 |
Last year's total assets = A0* | $500 | Last year's accruals | $30 |
Last year's profit margin = PM | 5% | Target payout ratio | 60% |
a. What is the dollar amount growth in sales next year?
b. What is the total amount of funds needed to support a sales growth rate of 30%?
c. What is the dollar amount of spontaneously generated funds?
d. What is the dollar amount of internally generated funds?
e. What is the dollar amount of additional funds needed?
f. What is the self-supporting growth rate assuming no external funding raised?
Please show step-by-step and show formulas.
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