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Hello, please could you help me with solving this assignment? Thank you 5. Using regression analysis to forecast assets The AFN equation and the financial
Hello, please could you help me with solving this assignment? Thank you
5. Using regression analysis to forecast assets The AFN equation and the financial statement-forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a little more difficult than that. In particular, some firms use regression analysis to predict the required assets needed to support a given level of sales. U.S. Robotics Inc. has used its historical sales and asset data to estimate the following regression equations: AccountsReceivableInventories=$85,230+0.257(Sales)=$9,110+0.180(Sales) U.S. Robotics Inc. currently has sales of $984,000, but it expects sales to grow by 10% over the next year. Use the regression models to calculate U.S. Robotics Inc.'s forecasted values for accounts receivable and inventories needed to support next year's sales. Forecasted Values for Next Year Accounts receivable Inventories Based on the next year's accounts receivable and inventory levels predicted by U.S. Robotics Inc.'s regression equations, the firm's DSO for next year is expected to be. _. Use 365 days as the length of a year in all calculations. 6. Factors that affect the AFN equation Several factors affect a firm's need for external funds. Evaluate the effect of each following factor and place a check next to each factor that is likely to increase a firm's need for external capital-that is, its AFN (additional funds needed). Check all that apply. The firm's forecasted sales are unexpectedly increased. The firm previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity. Management has decided that the firm needs to keep more inventory on hand throughout the year. Dividends to common shareholders are paid out of after-tax earnings. Do these payouts affect a firm's AFN? No, dividends do not affect a firm's AFN, because they are paid out of after-tax earnings. Yes, dividends still affect a firm's AFN even though they are paid out of after-tax earningsStep by Step Solution
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