Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 12-02 AFN equation Broussard Skateboard's sales are expected to increase by 20% from $8.4 million in 2016 to $10.08 million in 2017. Its assets

Problem 12-02 AFN equation

Broussard Skateboard's sales are expected to increase by 20% from $8.4 million in 2016 to $10.08 million in 2017. Its assets totaled $4 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%, and the forecasted payout ratio is 75%. What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar. $_______

Assume that an otherwise identical firm had $5 million in total assets at the end of 2016. Broussard's capital intensity ratio (A0*/S0) is (Higher, Lower, or Equal to?) than the otherwise identical firm; therefore, Broussard is (Less, more, eqaul to?) capital intensive - it would require (a smaller, a larger, the same?)increase in total assets to support the increase in sales.

PLEASE ANSWER THE BOLD QUESTIONS IN PARENTHESES

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 Management For Nurse Managers And Executives

Authors: Cheryl Jones, Steven A. Finkler, Christine T. Kovner, Jason Mose

5th Edition

0323415164, 9780323415163

More Books

Students also viewed these Finance questions

Question

Explain social supports impact on an individuals physical health.

Answered: 1 week ago

Question

What is the effect of word war second?

Answered: 1 week ago