Purchase Solution

# Calculating AFN: Forecast Baxter's additional funds needed for the upcoming year.

Not what you're looking for?

Baxter Video Product's sales are expected to increase by 20% from \$5 million in 2010 to \$6 million in 2011. Its assets totaled \$3 million at the end of 2010. Baxter is already a full capacity, so its assets must grow at the same rate as projected sales. At the end of 2010, current liabilities were \$1 million, consisting of \$250,000 of accounts payable, \$500,000 of notes payable, and \$250,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ration is 70%. Use the AFN equation to forecast Baxter's additional funds needed for the coming year.

##### Solution Summary

This post shows how to calculate the forecast the funds for coming year by using AFN equation

##### Solution Preview

Additional Funds needed = Required increase in assets - Spontaneous increase
in liabilities - Increase in retained earnings

Use AFN formula =(A/S)(S1-S0) - (L*/S)(S1-S0) -MS1(1-d)
A=Assets =\$3.0 ...

##### Operations Management

This quiz tests a student's knowledge about Operations Management

##### Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

##### Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media