Question
The Bouchard Company's sales are forecasted to increase from $500 in 2007 to $1000 in 2008. Here is the December 31, 2007 balance sheet: Cash
The Bouchard Company's sales are forecasted to increase from $500 in 2007 to $1000 in 2008. Here is the December 31, 2007 balance sheet:
Cash | 50 |
| Accounts payable | 25 |
Receivables | 100 |
| Notes payable | 75 |
Inventory | 100 |
| Accruals | 25 |
Total current assets | 250 |
| Total current liabilities | 125 |
|
| Long-term debt | 200 | |
|
| Common stock | 50 | |
Net fixed assets | 250 |
| Retained earnings | 125 |
Total assets | 500 |
| Total liab/equity | 500 |
Bouchard's fixed assets were used to only 50 percent of capacity during 2007, but its current assets were at their proper levels. All assets except fixed assets should be at a constant percentage of sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. Bouchard's after-tax profit margin is forecasted to be 8 percent, and its payout ratio will be 40 percent. What is Bouchard's additional funds needed for the current year?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started