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Increasing sales require additional assets, these assets must be financed, and it may or may not be possible to obtain all the funds needed for the firm's business plan. A key element in the financial forecasting process is to determine the -Select financing requirements through the AFN equation. Additional funds needed are the amount of -Select capital interest-bearing debt and preferred and common stock) that will be necessary to acquire the required assets. The AFN equation approximates the funds needed assuming that ratios -Select The AFN equation is written as follows: Additional Projected Spontaneous Increase in funds = increase - increase in retained needed, or AFN in assets liabilities earnings AFN = (Ao So)AS - (Lo/S0)AS - MS1(1 - Payout) The AFN equation shows the relationship of -Select funds needed by a firm to its projected increase in assets, the spontaneous increase in liabilities, and the increase in retained earnings. Rapidly growing companies require larger increases in assets; other things held constant, so -Select growth is an important factor to the firm's AFN. The -Select ratio is the ratio of assets required per dollar of sales. Companies with higher assets-to-sales ratios require more assets for a given increase in sales, hence a -Select need for external financing. -Select- funds arise out of normal business operations from its suppliers, employees, and the government that reduce the firm's need for external financing. The -Select the profit margin, the larger the net income available to support increases in assets, hence the -Select the need for external financing. The -Select ratio is the proportion of net income that is reinvested in the firm, and it is calculated as 1 minus the The higher the -Select ratio, the lower the firm's AFN. The -Select growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm's AFN equals zero. -Select- Quantitative Problem 1: Beasley Industries' sales are expected to increase from $4 million in 2019 to $5 million in 2020, or by 25%. Its assets totaled $3 million at the end of 2019. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $780,000, consisting of $140,000 of accounts payable, $450,000 of notes payable, and $190,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 50%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations. Round your answer to the nearest dollar Increasing sales require additional assets, these assets must be financed, and it may or may not be possible to obtain all the funds needed for the firm's business plan. A key element in the financial forecasting process is to determine the -Select financing requirements through the AFN equation. Additional funds needed are the amount of -Select capital interest-bearing debt and preferred and common stock) that will be necessary to acquire the required assets. The AFN equation approximates the funds needed assuming that ratios -Select The AFN equation is written as follows: Additional Projected Spontaneous Increase in funds = increase - increase in retained needed, or AFN in assets liabilities earnings AFN = (Ao So)AS - (Lo/S0)AS - MS1(1 - Payout) The AFN equation shows the relationship of -Select funds needed by a firm to its projected increase in assets, the spontaneous increase in liabilities, and the increase in retained earnings. Rapidly growing companies require larger increases in assets; other things held constant, so -Select growth is an important factor to the firm's AFN. The -Select ratio is the ratio of assets required per dollar of sales. Companies with higher assets-to-sales ratios require more assets for a given increase in sales, hence a -Select need for external financing. -Select- funds arise out of normal business operations from its suppliers, employees, and the government that reduce the firm's need for external financing. The -Select the profit margin, the larger the net income available to support increases in assets, hence the -Select the need for external financing. The -Select ratio is the proportion of net income that is reinvested in the firm, and it is calculated as 1 minus the The higher the -Select ratio, the lower the firm's AFN. The -Select growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm's AFN equals zero. -Select- Quantitative Problem 1: Beasley Industries' sales are expected to increase from $4 million in 2019 to $5 million in 2020, or by 25%. Its assets totaled $3 million at the end of 2019. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $780,000, consisting of $140,000 of accounts payable, $450,000 of notes payable, and $190,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 50%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations. Round your answer to the nearest dollar