Question
Hardware Store's sales were $550,000 during 2019, and its year-end assets were $440,000.For 2020, sales are expected to grow by 5%, and since the firm
Hardware Store's sales were $550,000 during 2019, and its year-end assets were $440,000.For 2020, sales are expected to grow by 5%, and since the firm is operating at full capacity, its assets must grow in proportion to sales.Its current liabilities consisted of $65,000 of accounts payable, $25,000 of notes payable, and $55,000 of accruals.Its after-tax profit margin is forecasted to be 17%, and the firm plans to pay out 25% of its earnings.Based on the AFN equation, what is the firm's additional funds needed (AFN) for 2020?(HINT: do notes payable spontaneously increase with sales? Show all work.)
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