Purchase Solution

Keeping Pace with Sales Growth

Not what you're looking for?

Ask Custom Question

Baxter Video Products'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 at 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, $50,000 of notes payable, and $250,000 of accruals. The after tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 70%.

If we hold to the assumption that the company pays no dividends, under these assumptions, what would be the additional funds needed for the coming year?

Purchase this Solution
Solution Summary

This solution looks at the additional funds needed for a company for their upcoming fiscal year, given various pieces of financial information.

Solution Preview

Income statement
Forecasted In US$
Sales 6000000
Net Income 300000
Retained Earnings 90000

Scenario 1 ( 70% Payout ratio)
Balance Sheet
Assets
Total Assets                           3,000,000 3,600,000
Liabilities and Equity 
Accounts payable ...

Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

View More Free Quizzes
Related BrainMass Solutions

  • Factors that impact the planning process

    Further, the rapid pace at which competitive scenario changes makes it imperative for organizations to constantly modify their plans to remain competitive, otherwise they will see decline in sales and market share.

  • Product Life Cycles and Industry Sales and Profits

    Here the sales increases but at very slow pace whereas the company inures loss at this stage. (ii) Growth: At this stage, a strong growth in sales can be seen and due to this company switches its loss into profit.

  • Pace of the Product Life Cycle & Impact to Marketing Product

    The product life cycle typically moves through a growth chart that begins with product introduction, through growth, maturation and finally decline.

  • Key Management Issues Today for IT Project Staffing

    employee motivated, managing growth, keeping staff skills current and reinforcing the right organizational culture.

  • Corporate Growth- Coca Cola Case Study

    If income over the next five years can be reasonably expected to keep pace with 2010 levels, Coke's growth will be limited only by its ability to capture additional market share, or to enter into previously untargeted market segments.

  • Training and Career Development in Organizations

    (2) There are several challenges to workforce development: - financial constraints, - the location of the target employees within the company, - difficulties in keeping pace with ever-changing technologies, - unwillingness to change, and

  • Product life cycle

    The pace during the growth stage will be high. It is expected that Starbucks freshly prepared coffee may speed through the growth stage within six months.

  • performance management system

    For instance, employees can manage current tasks and unit goals while keeping pace with, and adapting to, change in the work environment.

  • Product Life Cycle Movement and Pace

    We will monitor the introduction stage carefully, to ensure that the product merges into its next stage: Growth (tutor2u.net, 2005). Growth stage During the growth stage, a product starts to experience rapid sales and profit increases.

View More Related Solutions