Problem 12-02 AFN equation Broussard Skateboard's sales are expected to increase by 25% from $8.2 million in 2016...

80.2K

Verified Solution

Question

Finance

Problem 12-02
AFN equation
Broussard Skateboard's sales are expected to increase by 25%from $8.2 million in 2016 to $10.25 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 5%, and the forecasted payout ratio is 60%. 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 million in totalassets at the end of 2016. The identical firm's capital intensityratio (A₀/S₀) is
Select (only one)-
higher than, lower than, or equal to*
Item 2 than Broussard's; therefore, the identical firm is
Select (only one)-
less, more, or the same
Item 3 capital intensive - it would require
Select (only one)-
a smaller, a larger, or the same
Item 4 increase in total assets to support the increase insales.

Answer & Explanation Solved by verified expert

3.9 Ratings (719 Votes)

AmtLast years Sales820000000S0Sales growth rate25gIncrease in sales205000000 s0gCurrent Years sales1025000000S1Assets in 2016500000000A0ratio of assets to sales6098A0S0Increase in Assets to support increase in 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