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Discussion Prompt For purposes of this discussion, assume that you are the finance manager for Fuling Plastics, USA. In speaking with other managers, the firm's

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Discussion Prompt For purposes of this discussion, assume that you are the finance manager for Fuling Plastics, USA. In speaking with other managers, the firm's chief executive officer (CEO) has determined that substantial opportunities for growth exist. You have been invited to discuss Fuling Plastics, USA's financial ability to take advantage of these opportunities. You are aware that acquisition of Bunzl'ssupply chain abilities and existing assets are seen as an important strategy in managing Fuling Plastics' growth rate. Assume that current sales are $1,000. Fuling Plastics USA growth may exceed 50% in the upcoming year, and the Bunzl partnership may help alleviate the need for an expansion in fixed assets through other means. Using a percentage of sales methodology, assume that Fuling's net fixed assets are a fixed percentage (180 percent) of its sales, while costs are a fixed 80% of sales, so the firm's profit margin is constant. The company hopes to achieve at least a 25% growth in sales in the coming year. At the current level of sales, with Bunzl additions, capacity utilization will stand at 80%. Assume that Fuling maintains a fixed dividend ratio of 33.3%. Assume thatcurrent liabilities do not vary spontaneously with sales; we will disregard the effects of depreciation. 50% increase in sales Given: Current Sales $ 1,000 Current Assets (Ratio to Sales) 20% Increase in Liabilities and Owner's Equity $225 Net fixed assets (Ratio to Sales) 180% Costs (Ratio to Sales) 80% Profit Margin Constant Leave total net wolking capital unchanged Existing Priorities Keep dividend payout ratio constant Table 1. Fuling Data Tasks A. Compute and evaluate Fuling's external financing needed (EFN) in the event that sales grow 25% in the upcoming year, and explain each factor which the company must consider in planning for this level of growth. Specifically, consider capacity utilization and external financing needed. B. Compute and evaluate Fuling's options in the event that sales subsequently grow an additional 50% and the firm wishes to maintain current assets at 20% of sales, explaining which components of its financial policy the company must consider in planning for this level of growth. Specifically, consider profit margin, dividend policy, financial policy, and total asset turnover. Responses should comprise 200-600 words

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