Answered step by step
Verified Expert Solution
Question
1 Approved Answer
FinancialForecasting(%ofSalesMethod).Forthisandthenext5questions.Attheendof 2013 ,totalassetsforNeringaTourswere$1,200,000,ofwhichcurrentassetswere$200,000.Thefirmsaccountspayablewere$375,000.Salesin 2013 were$2,500,000,andareexpectedtoincreaseby40%in 2014 .NeringaTourshasnocurrentliabilitiesotherthanaccountspayable,whichvariesspontaneouslywithsales.In 2013, commonstockwas$425,000,andretainedearningsbalancewas$295,000.Thecompanyplanstoraisenewcommonstockintheamountof$75,000.Thefirmsnetprofitmarginis6%.Dividendpayoutratiois40%.Thefirmis operatingatlessthanfullcapacity anddoesnotplantoincreaseitsfixedassetsgoingforward.Howevercurrentassetswillvarydirectlywithsales.Giventheprojectedincreaseinsales,whatwillbethenewlevelofTOTALASSETSin2014?Hint:PleasereviewthevideoonFinancialPlanning. 2.) Calculate the firms TOTAL LIABILITIES (i.e. total debt) in 2013. Recall that +E.
- FinancialForecasting(%ofSalesMethod).Forthisandthenext5questions.Attheendof2013,totalassetsforNeringaTourswere$1,200,000,ofwhichcurrentassetswere$200,000.Thefirmsaccountspayablewere$375,000.Salesin2013were$2,500,000,andareexpectedtoincreaseby40%in2014.NeringaTourshasnocurrentliabilitiesotherthanaccountspayable,whichvariesspontaneouslywithsales.In2013,commonstockwas$425,000,andretainedearningsbalancewas$295,000.Thecompanyplanstoraisenewcommonstockintheamountof$75,000.Thefirmsnetprofitmarginis6%.Dividendpayoutratiois40%.Thefirmisoperatingatlessthanfullcapacityanddoesnotplantoincreaseitsfixedassetsgoingforward.Howevercurrentassetswillvarydirectlywithsales.Giventheprojectedincreaseinsales,whatwillbethenewlevelofTOTALASSETSin2014?Hint:PleasereviewthevideoonFinancialPlanning.
2.) Calculate the firms TOTAL LIABILITIES (i.e. total debt) in 2013. Recall that +E.
3.) Recall that current liabilities vary directly with sales. How much in total debt is the firm expecting for the year 2014?
4.) Calculate the total common equity balance expected for 2014
5.)Calculate the additional financing needed (AFN) for 2014
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
