Question
(Financial forecastingdiscretionary financing needs) Sambonoza Enterprises projects its sales next year to be $6 million and expects to earn 7 percent of that amount after
(Financial
forecastingdiscretionary
financing
needs)
Sambonoza Enterprises projects its sales next year to be
$6
million and expects to earn
7
percent of that amount after taxes. The firm is currently in the process of projecting its financing needs and has made the following assumptions (projections):1. Current assets will equal
28
percent of sales, and fixed assets will remain at their current level of
$1
million.2. Common equity is currently
$0.80
million, and the firm pays out half of its after-tax earnings in dividends.3. The firm has short-term payables and trade credit that normally equal
11
percent of sales, and it has no long-term debt outstanding.What are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs
(DFN)
for the coming year?
What are Sambonoza's financing requirements or total assets for the coming year?
million.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started