Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 The firm is currently in the process of forecasting sales, asset

image text in transcribed
image text in transcribed
image text in transcribed
Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year, in the year that just ended, Green Caterpilar Garden Supplies Inc, penerated $300,000 net income on sales of $12,500,000. The firm expects 5ales to increase by 15% this coming year and also expects to maintain its long-run dividend payout ratio of 35%. Suppose Green Catepliar's assets are fully utilized. Using the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support a firm's expected sales, it is projected that Green Catepillar will require in additional assuts. When a firm grows, some Fiabilities grow spontaneously along with sales. Spontancous liabilities are a source of capital that the firm will generate. Internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabiities for Green Catepillar this year? 565,000 360,000 569.000 $54,000 In addition, Green Caterpillar carden supplies Inc. is expected to generate net income this year. The fitm will pay out some of its earnings anf dividends but will retain the rest for future asset investment. Again, the more a firm oenerates intemally from its operations; the fess it wall have to raine externally frotn the capital markets. Assume that the firm's profit margin and dividend payout ratio are expected to remain constant. Given the preceding information, Green Catepillar expects to generate from operations that will be added to its existino retained earnings. (Hint: Round your answer to the nearest whole dollar.) According to the AFN equation and profections for Green Caterpillar Carden Suppiles inci, the firm' Aft ks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Digital Business And Electronic Commerce

Authors: Bernd W Wirtz

1st Edition

3030634817, 9783030634810

More Books

Students also viewed these Finance questions

Question

To what microcultural groups do you belong?

Answered: 1 week ago