Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. question 1 kings corporation's sales are expected

Question 1 Kings Corporation's sales are expected to increase from $6 million in 2019 to...

60.1K

Verified Solution

Question

Finance

image
Question 1 Kings Corporation's sales are expected to increase from $6 million in 2019 to $7 million in 2020. Its assets totaled $4 million at the end of 2019. Kings is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $2 million, consisting of $500,000 of accounts payable, $1,000,000 of notes payable, and $500,000 of accrued liabilities. Its profit margin is forecasted to be 2.5%, and the forecasted payout ratio is 20%. Use the AFN equation to forecast the additional funds Carlsbad will need for the coming year. I Question 2 Refer to problem 1. What additional funds would be needed if the company's year-end 2019 assets had been $3 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in problem 1? Is the company's "capital intensity" the same or different? Explain. Question 3 Refer to problem 1 and assume that the company had $4 million in assets at the end of 2019. However, now assume that the company's forecasted payout ratio is 5%. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in problem 12

Answer & Explanation Solved by verified expert
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

Other questions asked by students