Blue Elk Manufacturing reported sales of $720,000 at the end of last year, but this year,...

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Blue Elk Manufacturing reported sales of $720,000 at the end oflast year, but this year, sales are expected to grow by 8%. BlueElk expects to maintain its current profit margin of 23% anddividend payout ratio of 10%. The following information was takenfrom Blue Elk’s balance sheet:
Total assets: $400,000
Accounts payable: $80,000
Notes payable: $45,000
Accrued liabilities: $80,000
Based on the AFN equation, the firm’s AFN for the current yearis _ .
A positively signed AFN value represents:
a.A surplus of internally generated funds that can be investedin physical or financial assets or paid out as additionaldividends
b.A shortage of internally generated funds that must be raisedoutside the company to finance the company’s forecasted futuregrowth
c.A point at which the funds generated within the firm equal thedemands for funds to finance the firm’s future expected salesrequirements
Because of its excess funds, Blue Elk Manufacturing is thinkingabout raising its dividend payout ratio to satisfy shareholders.Blue Elk could pay out % of its earnings to shareholderswithout needing to raise any external capital. (Hint: What can BlueElk increase its dividend payout ratio to before the AFN becomespositive?)

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Additional Funds Needed AFN for the coming year Expected Next Year Sales Expected Next Year Sales Last Year Sales x 107 720000 x 108 777600 After Tax profit Margin After Tax profit Margin Expected Next Year Sales x Profit Margin 777600 x 23 178848 Dividend Payout Dividend Payout After Tax profit Margin x Dividend See Answer

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Blue Elk Manufacturing reported sales of $720,000 at the end oflast year, but this year, sales are expected to grow by 8%. BlueElk expects to maintain its current profit margin of 23% anddividend payout ratio of 10%. The following information was takenfrom Blue Elk’s balance sheet:Total assets:$400,000Accounts payable:$80,000Notes payable:$45,000Accrued liabilities:$80,000Based on the AFN equation, the firm’s AFN for the current yearis _____ .A positively signed AFN value represents:a.A surplus of internally generated funds that can be investedin physical or financial assets or paid out as additionaldividendsb.A shortage of internally generated funds that must be raisedoutside the company to finance the company’s forecasted futuregrowthc.A point at which the funds generated within the firm equal thedemands for funds to finance the firm’s future expected salesrequirementsBecause of its excess funds, Blue Elk Manufacturing is thinkingabout raising its dividend payout ratio to satisfy shareholders.Blue Elk could pay out____ % of its earnings to shareholderswithout needing to raise any external capital. (Hint: What can BlueElk increase its dividend payout ratio to before the AFN becomespositive?)

Total assets:	$400,000
Accounts payable:	$80,000
Notes payable:	$45,000
Accrued liabilities:	$80,000