One essay question has multiple parts -

Which of the following assumptions is assumed in the % of sales forecasting method?

a. All balance sheet assets accounts are tied directly to sales.

b. Accounts receivables and inventory are tied directly to sales.

c. Preferred stock and long-term debt are tied directly to sales.

d. Fixed assets, but not current assets, are tied directly to sales.

A firm has developed a forecasting model to estimate its AFN for the upcoming year.All else being equal, which of the following factors is most likely to lead to anincreaseof the additional funds needed (AFN)?

a. A sharp reduction in its forecasted sales.

b. A sharp increase in its forecasted sales.

c. The company reduces its dividend payout ratio.

d. The company discovers that it has excess capacity in its fixed assets.

Please show formula and step by step instructions so I can apply on a test - Thank you!!!

A company expects $600 million of sales this year, and it forecasts a 15% increase for next year.The CFO uses this equation to forecast inventory requirements at different levels of sales:Inventories = $30.2 + 0.2(Sales).All dollars are in millions.What is the projected inventory turnover ratio for the coming year?

a. 3.78

b. 2.96

c. 3.40

d. 3.57

e. OR, OTHER? - this is a trick question, it's e. but what is the correct answer?

Please show formula and step by step instructions so I can apply on a test - Thank you!!!

A firm's net profit margin is 12%, the total assets turnover ratio is 1.15, and its equity multiplier is 1.20. What is the firm's return on equity?

a. 16.56%

b. 11.50%

c. 14.40%

d. 15.98%

Please show formula and step by step instructions so I can apply on a test - Thank you!!!

You are going to forecast a firm's additional fundsneeded (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Last year's sales (S0) = $350 million; Sales growth rate (g) = 30%; Last year's total assets (A0*) = $500 million; Last year's profit margin (PM) = 8%; Last year's accounts payable=$40 million; Last year's notes payable=$50 million; Last year's accruals = $30 million; Target payout ratio= 50%. Based on the AFN equation, what is the AFN for the coming year?

a. $96.2

b. $103.5

c. $110.8

d. $119.9