Important information about AFN equation
Not what you're looking for?
Carter Corporation's sales are expected to increase from $5 million in 2008 to $6 million in 2009, or by 20%. Its assets totaled $3 million at the end of 2008. Carter is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2008, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 5%, and the forecasted retention ratio is 30%. Use the AFN equation to forecast the additional funds Carter will need for the coming year. Please show all work.
Purchase this Solution
Solution Summary
The solution explains how to calculate the amount of additional funds needed.
Solution Preview
The AFN equation is
AFN = (A*/S0)(delta S)- (L*/ S0)(delta S)- MS1(RR)
A* total assets now= 3,000,000
S0 current sales = 5,000,000
delta ...
Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Motivation
This tests some key elements of major motivation theories.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Learning Lean
This quiz will help you understand the basic concepts of Lean.