Question
How much would the AFN for the coming year change if it increased a payout from 10% to the new and higher level? Data for
How much would the AFN for the coming year change if it increased a payout from 10% to the new and higher level?
Data for use in the forecast are shown below.
A CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 45%, which the firm's investment bankers have recommended. All dollars are in millions.
Last year's sales = S0 $300.0
Last year's accounts payable $50.0
Sales growth rate = g 40%
Last year's notes payable $15.0
Last year's total assets = A0*$500
Last year's accruals$20.0
Last year's profit margin = PM 20.0%
Initial payout ratio 10.0%
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