Question 1:

Broussard Skateboard's sales are expected to increase by 25%from $7.8 million in 2016 to $9.75 million in 2017. Its assetstotaled $2 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 6%, and the forecasted payout ratio is 55%. Usethe AFN equation to forecast Broussard's additional funds neededfor the coming year. Round your answer to the nearest dollar. Donot round intermediate calculations.

Question 2:

Broussard Skateboard's sales are expected to increase by 15%from $8.8 million in 2016 to $10.12 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 6%, and the forecasted payout ratio is 70%. Whatwould be the additional funds needed? Do not round intermediatecalculations. Round your answer to the nearest dollar.
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Assume that an otherwise identical firm had $6 million in totalassets at the end of 2016. Broussard's capital intensity ratio(A₀*/S₀) is Higher / Lower /Equal toItem 2 than the otherwise identical firm;therefore, Broussard is More / Less / Same capitalintensive - it would require Small / Large / Sameincrease in total assets to support the increase in sales.

Question 3:

Broussard Skateboard's sales are expected to increase by 20%from $7.8 million in 2016 to $9.36 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 3%. Assume that the company pays no dividends.Under these assumptions, what would be the additional funds neededfor the coming year? Do not round intermediate calculations. Roundyour answer to the nearest dollar.
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Why is this AFN different from the one when the company paysdividends?
I. Under this scenario the company would have ahigher level of retained earnings but this would have no effect onthe amount of additional funds needed.
II. Under this scenario the company would have alower level of retained earnings which would reduce the amount ofadditional funds needed.
III. Under this scenario the company would have alower level of retained earnings but this would have no effect onthe amount of additional funds needed.
IV. Under this scenario the company would have ahigher level of retained earnings which would reduce the amount ofadditional funds needed.
V. Under this scenario the company would have ahigher level of retained earnings which would increase the amountof additional funds needed.

Question 4:

The Booth Company's sales are forecasted to double from $1,000in 2016 to $2,000 in 2017. Here is the December 31, 2016, balancesheet:

Cash		$  100		Accounts payable		$   50
Accounts receivable		200		Notes payable		150
Inventories		200		Accruals		50
Net fixed assets		500		Long-term debt		400
				Common stock		100
				Retained earnings		250
Total assets		$1000		Total liabilities and equity		$1000

Booth's fixed assets were used to only 50% of capacity during2016, but its current assets were at their proper levels inrelation to sales. All assets except fixed assets must increase atthe same rate as sales, and fixed assets would also have toincrease at the same rate if the current excess capacity did notexist. Booth's after-tax profit margin is forecasted to be 5% andits payout ratio to be 40%. What is Booth's additional funds needed(AFN) for the coming year? Round your answer to the nearestdollar.

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