Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Booth Company's sales are forecasted to double from $1,000 in 2016 to $2,000 in 2017. Here is the December 31, 2016, balance sheet: Cash

The Booth Company's sales are forecasted to double from $1,000 in 2016 to $2,000 in 2017. Here is the December 31, 2016, balance sheet:

Cash $100 Accounts Payable $50
Accounts Receivable 200 Notes Payable 150
Inventories 200 Accruals 50
Net Fixed Assets 500 Long-Term Debt 400
Common Stock 100
Retained Earnings 250
TOTAL ASSETS $1,000 TOTAL LIABILITIES & EQUITY $1,000

Booth's fixed assets were used to only 50% of capacity during 2016, but its current assets were at their proper levels in relation to sales. Spontaneous liabilities and all assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 4% and its payout ratio to be 40%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar.

$______________

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

Finance And Industrial Policy

Authors: Giovanni Cozzi, Susan Newman, Jan Toporowski

1st Edition

0198744501, 978-0198744504

More Books

Students also viewed these Finance questions

Question

using signal flow graph

Answered: 1 week ago