Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Onion had $14 million of sales this year, which are expected to grow by 20% next year. The projected profit margin is 8% and

The Onion had $14 million of sales this year, which are expected to grow by 20% next year. The projected profit margin is 8% and its retention ratio is 30%. The balance sheet at the end of this year is as follows (in $ million):

Assets Liabilities and Equity
Cash & equivalents 3.4 Accounts payable 2.6
Accounts receivable 2.8 Accrued wages 1.5
Inventory 1.2 Notes payable 3.2
Current assets 7.4 Current liabilities 7.3
Equipment 18.2 Long-term debt 5.5
Real estate 14.3 Total liabilities 12.8
Fixed assets 32.5 Equity 27.1
Total assets 39.9 Total liab. & equity 39.9

Assume that all assets are operating at full capacity, except that fixed assets operate at 95% of capacity.

  1. What is the expected change in sales for next year (in $ million)?
  2. What is the projected increase in assets for next year (in $ million)?
  3. What is the projected increase in liabilities for next year (in $ million)?
  4. What is the projected increase in retained earnings for next year (in $ million)?
  5. What is the required new funds (RNF) for next year (in $ million)?

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

More Books

Students also viewed these Finance questions

Question

7. What are the functions of verbal communication?

Answered: 1 week ago