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Additional Funds Needed

Please work this in excel so I can understand the concept.

Additional Funds Needed with Excess Capacity

Baxter Box Company's balance sheet showed the following amounts as of December 31st:

Cash 10.00 Accounts Payable 15.00
Accounts Receivable 40.00 Accruals 5.00
Inventory 50.00 Notes Payable 20.00
Net Fixed Assets 100.00 Long-term debt 20.00
Common Stock 20.00
Retained Earning 120.00
Total Assets 200.00 Total Liabilities and Equity 200.00

Last year the firm's sale were $2,000, and its had a profit margin of 10 percent and a dividend payout ratio of 50 percent. Baxter Box operated its fixed assets at 80 percent of capacity during the year. The company expected to increase next year's sales by 37.5 percent to $2,750, but the profit margin is expected to fall to 3 percent, and the dividend payout ratio is expected to rise to 60 percent. What is Baxter Box additional funds needed (AFN) for next year?

Solution Preview

Please see the attachment.

Baxter Box Company's balance sheet showed the following amounts as of December 31st:

Cash 10.00 Accounts payable 15.00
Accounts receivable 40.00 Accruals 5.00
Inventory 50.00 Notes payable 20.00
Net fixed assets 100.00 Long-term debt 20.00
Common stock 20.00
...

Solution Summary

The solution explains how to determine the amount of Additional Funds Needed (AFN).

$2.19