Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help with all multiple choice and blanks! Thanks! Fuzzy Button Clothing Company has the following end-of-year balance sheet: Fuzzy Button Clothing Company Balance Sheet

image text in transcribedimage text in transcribed

Please help with all multiple choice and blanks! Thanks!

Fuzzy Button Clothing Company has the following end-of-year balance sheet: Fuzzy Button Clothing Company Balance Sheet For the Year Ended on December 31 Liabilities Assets Current Liabilities Accounts payable Current Assets: Cash and equivalents $150,000 $250,000 Accounts receivable Accrued liabilities 400,000 150,000 Notes payable Inventories 350,000 100,000 Total Current Assets $900,000 Total Current Liabilities $500,000 Net Fixed Assets Long-Term Bonds 1,000,000 Net plant and equipment $2,100,000 Total Debt $1,500,000 (cost minus depreciation) Common Equity Common stock 800,000 Retained earnings 700,000 Total Common Equity $1,500,000 Total Liabilities and Equity Total Assets $3,000,000 $3,000,000 The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Fuzzy Button Clothing Company generated $300,000 net income on sales of $14,000,000. The firm expects sales to increase by 18% this coming year and also expects to maintain its long-run dividend payout ratio of 35%. Suppose Fuzzy Button Clothing Company's assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Fuzzy Button Clothing Company's expected sales. $621,000 $540,000 $648,000 $432,000 When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Fuzzy Button Clothing Company this year? $79,200 $72,000 $82,800 $64,800 In addition, Fuzzy Button Clothing Company is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise externally from the capital markets. Assume that the firm's profit margin and dividend payout ratio are expected to remain onstant. Given the preceding information, Fuzzy Button Clothing Company is expected to generate $ from operations that will be added to retained earnings. According to the AFN equation and projections for Fuzzy Button Clothing Company, the firm's AFN is $

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

Economics And Personal Finance

Authors: Irvin Tucker, Joan Ryan

1st Edition

1133562108, 978-1133562108

More Books

Students also viewed these Finance questions

Question

What is the background of the situation?

Answered: 1 week ago