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solutions for 4.1 and 4.2 Carter Corporation's sales are expected to increase from $5 million in 2001 to $6 million in 2002, or by 20
solutions for 4.1 and 4.2
Carter Corporation's sales are expected to increase from $5 million in 2001 to $6 million in 2002, or by 20 percent. Its assets totaled $3 million at the end of 2001, Carter is at full capac- bilities were $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accruals. The after-tax profit margin is forecasted to be 5 percent, add the forecasted payout ratio is 70 percent. Use this information to answer Problems 4-1, 4.2, and 4-3. 41 Use the AFN formula to forecast Carter's additional funds needed for the coming year, AFN FORMULA 42 What would the additional funds needed be if the company's year-end 2001 assets had been $4 AFN FORMULA million? Assume that all other numbers are the same. Why is this AFN different from the one found in Problem 4-1? Is the company's "capital intensity" the same or different? you 4-3. Return to the assumption that the company had $3 inillion in assets at the end of 2001, but now AFN.FORMULA assume that the company pays no dividends. Under these assumptions, what would be the addi- tional funds needed for the coming year? Why is this AFN different from the one you found in Probler. 4-1Step by Step Solution
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