Question
Zapatera Enterprises is evaluating its financing requirements for the coming year. The firm has been in business for only 1 year, but the CFO predicts
Zapatera Enterprises is evaluating its financing requirements for the coming year. The firm has been in business for only 1 year, but the CFO predicts the firm's operating expenses, current assets, net fixed assets, and current liabilities will remain at their current proportion of sales. Last year Zapatera had $12.28 million in sales and net income of $1.22 million. The firm anticipates that next year's sales will reach $15.52 million, with net incomerising to $2.08 million. Given its present high rate of growth, the firm retains all its earnings to help defray the cost of new investments. The firm's balance sheet for is found below:
Zapatera Enterprises, Inc. | ||
Balance Sheet | 12/31/10 | % of Sales |
Current assets $2,600,000 21.173%
net fixed assets $6,500,000 52.932%
Total 9,100,000
Liabilities and Owners Equity
Accounts payable 3,300,000 26.873%
long-term debt 2,500,000
Total liabilites 5,800,000
Common stock $1,300,000
paid-in capital 2,200,000
Retained earnings -200,000
common equity 3,300,000
Total 9,100,000
Estimate Zapatera's financing requirements(that is, total assets) for 2014 and its discretionary financing needs(DFN) for 2014. Use the percentatge of sales given in Zapatera Enterprises balance sheet for 2013. Make sure to round all intermediate calculations to at lease five decimal places.
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