Broussard Skateboard's sales are expected to increase by 15% from $8.0 million in 2016 to $9.20...

90.2K

Verified Solution

Question

Finance

Broussard Skateboard's sales are expected to increase by15% from $8.0 million in 2016 to $9.20 million in 2017. Its assetstotaled $5 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 55%. Whatwould be the additional funds needed? Do not round intermediatecalculations. Round your answer to the nearest dollar.
$
Assume that an otherwise identical firm had $6 millionin total assets at the end of 2016. The identical firm's capitalintensity ratio (A₀*/S₀) is -Select-higherthan, lower than, or equal to than Broussard's; therefore, theidentical firm is -Select-less,more, or the same capital intensive- it would require -Select-a smaller,a larger, or the same increasein total assets to support the increase in sales.

Answer & Explanation Solved by verified expert

3.9 Ratings (569 Votes)

Additional Funds Needed AFN for the coming year Expected Next Year Sales 9200000 After Tax profit Margin After Tax profit Margin Expected Next Year Sales x Profit Margin 9200000 x 4 368000 Dividend Payout Dividend Payout After Tax profit Margin x See Answer

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

Transcribed Image Text

Broussard Skateboard's sales are expected to increase by15% from $8.0 million in 2016 to $9.20 million in 2017. Its assetstotaled $5 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 $450,000 of accruals. The after-tax profit margin isforecasted to be 4%, and the forecasted payout ratio is 55%. Whatwould be the additional funds needed? Do not round intermediatecalculations. Round your answer to the nearest dollar.$Assume that an otherwise identical firm had $6 millionin total assets at the end of 2016. The identical firm's capitalintensity ratio (A0*/S0) is -Select-higherthan, lower than, or equal to than Broussard's; therefore, theidentical firm is -Select-less,more, or the same capital intensive- it would require -Select-a smaller,a larger, or the same increasein total assets to support the increase in sales.