1. AFN equation
Broussard Skateboard's sales are expected to increase by 25%from $8.0 million in 2016 to $10.00 million in 2017. Its assetstotaled $2 million at the end of 2016. Broussard is already at fullcapacity, so its assets must grow at the same rate as projectedsales. At the end of 2016, current liabilities were $1.4 million,consisting of $450,000 of accounts payable, $500,000 of notespayable, and $450,000 of accruals. The after-tax profit margin isforecasted to be 4%, and the forecasted payout ratio is 70%. Usethe AFN equation to forecast Broussard's additional funds neededfor the coming year. Round your answer to the nearest dollar. Donot round intermediate calculations.
Answer:
2. AFN equation
Broussard Skateboard's sales are expected to increase by 20%from $8.6 million in 2016 to $10.32 million in 2017. Its assetstotaled $6 million at the end of 2016. Broussard is already at fullcapacity, so its assets must grow at the same rate as projectedsales. At the end of 2016, current liabilities were $1.4 million,consisting of $450,000 of accounts payable, $500,000 of notespayable, and $450,000 of accruals. The after-tax profit margin isforecasted to be 5%, and the forecasted payout ratio is 75%. Whatwould be the additional funds needed? Do not round intermediatecalculations. Round your answer to the nearest dollar.
Answer:
3. AFN Equation
Broussard Skateboard's sales are expected to increase by 20%from $8.8 million in 2016 to $10.56 million in 2017. Its assetstotaled $4 million at the end of 2016. Broussard is already at fullcapacity, so its assets must grow at the same rate as projectedsales. At the end of 2016, current liabilities were $1.4 million,consisting of $450,000 of accounts payable, $500,000 of notespayable, and $450,000 of accruals. The after-tax profit margin isforecasted to be 5%. Assume that the company pays no dividends.Under these assumptions, what would be the additional funds neededfor the coming year? Do not round intermediate calculations. Roundyour answer to the nearest dollar.
Answer:
