Problem 12-01 AFN equation Broussard Skateboard's sales are expected to increase by 20% from $8.2 million in 2016...

70.2K

Verified Solution

Question

Finance

Problem 12-01
AFN equation
Broussard Skateboard's sales are expected to increase by 20%from $8.2 million in 2016 to $9.84 million in 2017. Its assetstotaled $3 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 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 & Explanation Solved by verified expert

4.2 Ratings (696 Votes)

Broussards additional funds needed for the coming year Expected Next Year Sales 9840000 After Tax profit Margin After Tax profit Margin Expected Next Year Sales x Profit Margin 9840000 x 500 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

Problem 12-01AFN equationBroussard Skateboard's sales are expected to increase by 20%from $8.2 million in 2016 to $9.84 million in 2017. Its assetstotaled $3 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 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.