Explore BrainMass

Explore BrainMass

    Compute TIE and AFN formula to forecast funds

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Question 1:

    The following shows some information related to ABC Company.
    Total debt outstanding $300,000
    Annual Interest Rate 5%
    Annual Revenues $1,000,000
    Average tax rate 35%
    Net profit margin on revenues 10%

    What is the company's TIE (times-interest earned)?

    Question 2:

    ABC Company's sales are expected to increase from $5 million in 2004 to $6 million in 2005, or by 20%. Its assets totaled $3 million at the end of 2004. ABC is full capacity, so its assets must grow at the same rate as projected sales. At the end of 2004, current liabilities were $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accruals. The after-ax profit margin is forecasted to be 5%, and the forecasted payout ratio is 70%. Use the AFN formula to forecast ABC's additional funds needed for the coming year.

    © BrainMass Inc. brainmass.com March 4, 2021, 10:05 pm ad1c9bdddf
    https://brainmass.com/business/accounting/computing-tie-afn-formula-forecast-funds-297325

    Solution Summary

    Provides steps necessary to determine the formula to forecast funds.

    $2.49

    ADVERTISEMENT