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Need help with both problems please. 12-1 AFN EQUATION: Carlsbad corporation's sales are expected to increase from $5 million in 2016 to $6 million in
Need help with both problems please.
12-1 AFN EQUATION: Carlsbad corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. It's assets total $3 million at the end of 2016. Carlsbad is at full capacity, so its assets most grow in proportion to projected sales. At the end of 2016, current liabilities are $1million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecast it to be 3%, and the forecast it retention ratio is 30%. Used the AFN equation to forecast the additional funds Carlsbad will need for the coming year 12-2 AFN EQUATION: Refer to problems 12-1 and assume that the company had S3 million in assets at the end of 2016. However, now assume that the company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is the AFN different from the one you found in problems 12-12Step by Step Solution
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