Question
I am not sure how to calculate how much additional funding if any will be needed this year if the companies sales are expected to
I am not sure how to calculate how much additional funding if any will be needed this year if the companies sales are expected to grow at a rate of 25% from the 2013 to 2014. I have the following figures. What steps and information are needed to solve for this solution?
Say total sales in 2013 were $1,000,000 and the 2013 balance sheet is:
Cash$ 100,000
Accounts receivable$ 200,000
Inventories$ 200,000
Net fixed assets$500,000(Fixed assets were used at 80% of capacity last year and its current assets were fully utilized, Fixed assets would grow at the same rate as sales if they were used at full capacity)
Accounts payable$ 50,000
Notes payable$150,000
Accruals$50,000
Long-term debt$400,000
Common stock$100,000
Retained earnings$250,000
Total assets$1,000,000 (All assets will increase at the same rate as sales except fixed assets which have excess capacity)
Total liabilities and equity $1,000,000
After-tax profit margin is 10% and its payout ratio is 75%.
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