Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Hernandez Trucking is evaluating its financing requirements for the coming year. The firm has only been in business for three years and the firm's Chief
Hernandez Trucking is evaluating its financing requirements for the coming year. The firm has only been in business for three years and the firm's Chief Financial Officer, Eric Stevens, predicts that the firm's operating expenses, current assets, and current liabilities will remain at their current proportion of sales. Last year, Hernandez had $20 million in sales with net income of $1 million. The firm anticipates that next year's sales will reach $25 million with net income rising to S2 million. Given its present high rate of growth, the firm retains all its earnings to help defray the cost of new investments The firm's balance sheet for the year just ended follows: Hernandez Trucking Company, Inc., Balance Sheet 31/12/2020 % of sales Current assets 4,000,000 20% Net fixed assets 8,000,000 40% Total $12,000,000 15% NA Liabilities and Owner's Equity Accounts payable Long term debt Total liabilities Common stock Paid-in capital Retained earnings Common equity Total 3,000,000 2,000,000 $5,000,000 1,000,000 1,800,000 4,200,000 $7,000,000 $12.000,00 NA NA Calculate EFN for this company
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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