Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. (5-1) afn equation martel sporting goods' sales ar

(5-1) AFN EQUATION Martel Sporting Goods' sales are expected to increase by 15% from $17...

60.1K

Verified Solution

Question

Accounting

image
(5-1) AFN EQUATION Martel Sporting Goods' sales are expected to increase by 15% from $17 million in 2021 to $19.55 million in 2022 . Its assets totalled $6.8 million at the end of 2021. Martel is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2021, current liabilities were $3.04 million, consisting of $1.2 million of accounts payable, $1 million of notes payable, and $840,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 30%. Use the AFN equation to forecast Martel's additional funds needed for the coming year. Answer: AFN=$29,750 (5-2) AFN EQUATION Refer to Problem 5-1. What would be the additional funds needed if the company's year-end 2021 assets had been $9.35 million? Assume that all other numbers, including sales, are the same as in Problem 5-1 and that the company is operating at full capacity. Why is this AFN different from the one you found in Problem 5-1? Is the company's "capital intensity" ratio the same or different

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students