Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year justended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, andexpects sales of $8 million next year.AssetsCurrent assetsFixed assetsTotal assetsLiabilities and EquityAdditional funds needed$2,000,000 Current liabilitiesLong-term debt5,000,000Equity$7,000,000 Total liabilities and equity$2,500,0001,500,0003,000,000$7,000,000If all assets and current liabilities are expected to grow with sales, what amount of additional funds willWind Em need from external sources to fund the expected growth? (Enter your answer in dollars not inmillions.)

Retained earnings refer to the percentage of profit retained or withheld by the company for further…

Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $8 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed Current liabilities $2,000,000 5,000,000 Long-term debt Equity $7,000,000 Total liabilities and equity $2,500,000 1,500,000 3,000,000 $7,000,000 If all assets and current liabilities are expected to grow with sales, what amount of additional funds will Wind Em need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.)

Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $8 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed Current liabilities $2,000,000 5,000,000 Long-term debt Equity $7,000,000 Total liabilities and equity $2,500,000 1,500,000 3,000,000 $7,000,000 If all assets and current liabilities are expected to grow with sales, what amount of additional funds will Wind Em need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 5P

See similar textbooks

Similar questions

Long-Term Financing Needed At year-end 2018, Wallace Landscapings total assets were 2.17 million, and its accounts payable were 560,000. Sales, which in 2018 were 3.5 million, are expected to increase by 35% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to 625,000 in 2018, and retained earnings were 395,000. Wallace has arranged to sell 195,000 of new common stock in 2019 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2019. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 5%, and 45% of earnings will be paid out as dividends. a. What were Wallaces total long-term debt and total liabilities in 2018? b. How much new long-term debt financing will be needed in 2019? [Hint: AFN New stock = New long-term debt.)
The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, and cash and marketable securities of $120,000. What were Kretovich’s annual sales?
Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.2 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent, and expects sales of $7.2 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed $ 720,000 Current liabilities 4,800,000 Long-term debt Equity $5,520,000 Total liabilities and equity $ 938,400 1,900,000 2,681,600 $5,520,000 If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from external sources to fund the expected growth? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.)
Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $10.9 million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent, and expects sales of $8.9 million next year. Assets Current assets Fixed assets Total assets $ 2,621,000 4,900,000 $ 7,521,000 Liabilities and Equity Current liabilities Long-term debt Equity Total liabilities and equity If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from external sources to fund the expected growth? Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign. X Answer is complete but not entirely correct. Additional funds needed (243,300) X $ 2,557,140 1,950,000 3,013,860 $ 7,521,000
Suppose that Psy Ops Industries currently has the balance sheet shown below, and that sales for the year just ended were $4.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $7.4 million next year. Assets Current $1,980,000 Current liabilities Long-term debt Equity assets Fixed assets 3,700,000 Liabilities and Equity Total assets $5,680,000 Total liabilities and equity $ 1,672,000 1,800,000 2,208,000 $ $5,680,000 If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will Psy Ops need from external sources to fund the expected growth? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.) Additional funds needed
Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $10.2 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent, and expects sales of $8.2 million next year. Assets Current assets Fixed assets Total assets $ 2,124,000 4,200,000 $ 6,324,000 Liabilities and Equity Current liabilities Long-term debt Equity Total liabilities and equity Additional funds needed $ If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from external sources to fund the expected growth? Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign. Answer is complete but not entirely correct. 1,397,200 x $ 1,707,480 1,600,000 3,016,520 $ 6,324,000
Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $10.6 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent, and expects sales of $8.6 million next year. Assets Current $2,396,000 Current liabilities assets Fixed assets 4,600,000 Liabilities and Equity Total assets $6,996,000 Long-term debt Equity Total liabilities and equity $ 2,168,760 1,800,000 3,027,240 $6,996,000 If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from external sources to fund the expected growth? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.) Additional funds needed
Suppose that Psy Ops Industries currently has the balance sheet shown below, and that sales for the year just ended were $4.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $7.4 million next year. Assets Liabilities and Equity Current assets $ 1,980,000 Current liabilities $ 1,672,000 Fixed assets 3,700,000 Long-term debt 1,800,000 Equity 2,208,000 Total assets $ 5,680,000 Total liabilities and equity $ 5,680,000 If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will Psy Ops need from external sources to fund the expected growth? Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.
Assume average net operating assets equal $1,000,000. The average book value of common equity equals $750,000. Assume sales for the period total $3,000,000. Assume opening income totals $150,000 and net borrowing costs (cost of debt) is 3%. Solve for the net financing expenses
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here: Sales Costs Taxable income Taxes Net income Dividends Addition to retained earnings Current assets Fixed assets Total assets Assets Current assets Fixed assets INCOME STATEMENT Total assets $ 7,230,000 18,390,000 $ 1,149,982 1,724,853 Assets b-2. External financing needed c. Sustainable growth rate $ 25,620,000 a. Calculate the external funds needed for next year using the equation from the chapter. Note: Do not round intermediate calculations. External financing needed b-1. Prepare the firm's pro forma balance sheet for next year. Note: Do not round intermediate calculations. BALANCE SHEET Short-term debt Long-tern debt Common stock Accumulated retained earnings $ 30,500,000 26,077,300 $ 4,422,700 1,547,945 $ 2,874,755 Liabilities and Equity Total equity Total liabilities and…
Using the AFN formula approach, calculate the total assets of Harmon Photo Company given the following information: Sales this year = $3,000; increase in sales projected for next year = 20%; net income this year = $250; dividend payout ratio = 40%; projected excess funds available next year = $100; accounts payable = $600; notes payable = $100; and accrued wages and taxes = $200. Except for the accounts noted, there were no other current liabilities. Assume that the firm’s profit margin remains constant and that the firm is operating at full capacity. $3,000 $2,200 $2,000 $1,200 $1,000
Projected Operating Assets Berman & Jaccor Corporation's current sales and partial balance sheet are shown below. Sales Balance Sheet: Assets Cash This year $1,000 $200 $ 145 Short-term investments Accounts receivable Inventories $ 150 $200 $695 Total current assets Net fixed assets Total assets $ 450 $1,145 Sales are expected to grow by 10% next year. Assuming no change in operations from this year to next year, what are the projected total operating assets? Do not round intermediate calculations. Round your answer to the nearest dollar. $