Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Let me know if you can solve this question? and how long will it take to solve this financial accounting Q. 3. McNichol's 2016 balance

image text in transcribed

Let me know if you can solve this question? and how long will it take to solve this financial accounting Q.

image text in transcribed 3. McNichol's 2016 balance sheet is shown below. All values are in millions. Sales in 2016 were $320M and Net Income was $16M. They paid 40% of Net Income out as dividends. Balance Sheet as of 12/31/2016 Cash $ Accounts Receivable Inventory Total Current Assets $ 128 Net Fixed Assets Total Assets 16 48 64 Accounts Payable Notes Payable Total Current Liabilities 160 $ 288 $ 32 20 ____ $ 52 Long-Term Debt Common Stock Retained Earnings Total Liabilities & Equity 48 80 108 $ 288 Assume that McNichol used their fixed assets at full capacity in 2016 and that projected sales for the coming year are $368M. a. Calculate McNichol's external financing needed (EFN) for 2017. Answer the following independent questions in words only: b. Suppose fixed assets had been used at only 50% capacity in 2016. How would that affect McNichol's additional need for funds? Briefly explain. c. Suppose McNichol plans to increase its capital intensity by automating more of its production process. How would this affect the additional need for funds? Briefly explain. d. Would you expect McNichol's financing needs to increase or decrease if they institute a just-in-time inventory process that allows them to hold half the inventory levels that they normally have in the past? Briefly explain. e. If McNichol's profit margin increases at the higher levels of sales, will additional funding needs change from what you calculated in (a)? Briefly explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

12th edition

134725980, 9780134726656 , 978-0134725987

More Books

Students also viewed these Accounting questions

Question

Relax your shoulders

Answered: 1 week ago

Question

Keep your head straight on your shoulders

Answered: 1 week ago

Question

Be straight in the back without blowing out the chest

Answered: 1 week ago