Additional Funds Needed
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Please see attached. Please work the formula in steps.Last year's sales = So $400,000 Last year's accounts payable $40,000
Sales growth rate = g 30% Last year's notes payable $20,000
Last year's total assests = Ao $140,000 Last year's accruals $30,000
Last year's profit margin = M 15.0% Target payout ratio 30.0%
a. Based on the AFN equation, what is the AFN for the coming year?
b. Interpret the answer
c. If notes payable increase what is expected to happen to AFN?
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The solution explains how to calculate the amount of additional funds needed.
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Last year's sales = So $400,000 Last year's accounts payable $40,000
Sales growth rate = g 30% Last year's notes payable $20,000
Last year's total assests = Ao $140,000 Last year's accruals $30,000
Last year's profit margin = M 15.0% Target payout ratio 30.0%
a. Based on the AFN equation, what is the AFN for the coming year?
AFN = Increase in assets - increase in spontaneous liabilities - increase in retained earnings
The increase in assets requires investment. A part is met ...
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