Question
The Booth Company?s sales are forecasted to double from $1,000 in 2013 to $2,000 in 2014. Here is the December 31, 2013, balance sheet: Cash
The Booth Company?s sales are forecasted to double from $1,000 in 2013 to $2,000 in
2014. Here is the December 31, 2013, 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 and equity $1,000
Booth?s fixed assets were used to only 50% of capacity during 2013, but its current assets were
at their proper levels in relation to sales. 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 5% and its
payout ratio to be 60%. What is Booth?s additional funds needed (AFN) for the coming year?
The Booth Company's sales are forecasted to double from $1,000 in 2013 to $2,000 in 2014. Here is the December 31, 2013, 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 and equity $1,000 Booth's fixed assets were used to only 50% of capacity during 2013, but its current assets were at their proper levels in relation to sales. 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 5% and its payout ratio to be 60%. What is Booth's additional funds needed (AFN) for the coming yearStep by Step Solution
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