western Gas & Electric Co. (WGRE) currently has $610,000 in total assets and sales of $1,400,000. Half of M ac total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 2270 the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is WG&E was using its fixed assets at only 93% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? $1,505,376 $1,430,107 $1,279,570 $1,204,301 When you consider that WG&E's fixed assets were being underused, its target fixed assets to sales ratio should be When you consider that WG&E's fixed assets were being underused, how much fixed assets must WG&E raise to support its expected sales for next year? $47,211 $34,895 $41,053 $43,106 As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider this case: Bohemian Manufacturing Company has no debt in its capital structure and has $100 million in assets. Its sales revenues last year were $30 million with a net income of $5 million. The company distributed $1.70 million as dividends to its shareholders last year. What is the firm's self-supporting growth rate? 3.41% 5.79% 1.73% 7.18% Which of the following are assumptions of the self-supporting growth model? Check all that apply. The firm pays no dividends. The firm's liabilities and equity must increase at the same rate. The firm will not issue any new common stock next year. The firm's total asset turnover ratio remains constant. Green Caterpillar Garden Supplies Inc. reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 7%. Green Caterpillarexpects to maintain its current profit margin of 20% and dividend payout ratio of 25%. The firm's total assets equaled $400,000 and were operated at full capacity. Green Caterpillar's balance sheet shows the following current liabilities: accounts payable of $65,000, notes payable of $30,000, and accrued liabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm's AFN for the coming year? O O -$115,652 -$105,138 -$120,909 -$99,881 A negatively-signed AFN value represents: A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends Because of its excess funds, Green Caterpillar is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Green Caterpillar pay to shareholders without needing to raise any external capital? (Hint: What can Green Caterpillar increase its dividend payout ratio to before the AFN becomes positive?) 88.4% 66.3% 61.9% 84.0% western Gas & Electric Co. (WGRE) currently has $610,000 in total assets and sales of $1,400,000. Half of M ac total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 2270 the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is WG&E was using its fixed assets at only 93% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? $1,505,376 $1,430,107 $1,279,570 $1,204,301 When you consider that WG&E's fixed assets were being underused, its target fixed assets to sales ratio should be When you consider that WG&E's fixed assets were being underused, how much fixed assets must WG&E raise to support its expected sales for next year? $47,211 $34,895 $41,053 $43,106 As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider this case: Bohemian Manufacturing Company has no debt in its capital structure and has $100 million in assets. Its sales revenues last year were $30 million with a net income of $5 million. The company distributed $1.70 million as dividends to its shareholders last year. What is the firm's self-supporting growth rate? 3.41% 5.79% 1.73% 7.18% Which of the following are assumptions of the self-supporting growth model? Check all that apply. The firm pays no dividends. The firm's liabilities and equity must increase at the same rate. The firm will not issue any new common stock next year. The firm's total asset turnover ratio remains constant. Green Caterpillar Garden Supplies Inc. reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 7%. Green Caterpillarexpects to maintain its current profit margin of 20% and dividend payout ratio of 25%. The firm's total assets equaled $400,000 and were operated at full capacity. Green Caterpillar's balance sheet shows the following current liabilities: accounts payable of $65,000, notes payable of $30,000, and accrued liabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm's AFN for the coming year? O O -$115,652 -$105,138 -$120,909 -$99,881 A negatively-signed AFN value represents: A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends Because of its excess funds, Green Caterpillar is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Green Caterpillar pay to shareholders without needing to raise any external capital? (Hint: What can Green Caterpillar increase its dividend payout ratio to before the AFN becomes positive?) 88.4% 66.3% 61.9% 84.0%