Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 4P
Sales Increase
Maggie’s Muffins Bakery generated $5 million in sales during 2018, and its year-end total assets were $2.5 million. Also, at year-end 2018, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2019, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 7%, and its payout ratio will be 80%. How large a sales increase can the company achieve without having to raise funds externally–that is, what is its self-supporting growth rate?
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Self-Supporting Growth Rate
Maggie's Muffins Bakery generated $2 million in sales during 2019, and its year-
end total assets were $1.7 million. Also, at year-end 2019, current liabilities were
$1 million, consisting of $300,000 of notes payable, $500,000 of accounts
payable, and $200,000 of accruals. Looking ahead to 2020, the company
estimates that its assets must increase at the same rate as sales, its
spontaneous liabilities will increase at the same rate as sales, its profit margin
will be 3%, and its payout ratio will be 80%. How large a sales increase can the
company achieve without having to raise funds externally—that is, what is its
self-supporting growth rate? Do not round intermediate calculations. Enter your
answer for sales increase in dollars. For example, an answer of $2 million should
be entered as 2,000,000. Round the monetary value to the nearest dollar and
percentage value to one decimal place.
Sales can increase by $
-200,000
I
that is by
0.71
%.
Self-Supporting
Growth Rate
Maggie's Muffins Bakery generated $2
million in sales during 2019, and its
year-end total assets were $1.6 million.
Also, at year-end 2019, current liabilities
were $1 million, consisting of $300,000
of notes payable, $500,000 of accounts
payable, and $200,000 of accruals.
Looking ahead to 2020, the
company
estimates that its assets must increase
at the same rate as sales, its
spontaneous liabilities will increase at
the same rate as sales, its profit margin
will be 3%, and its payout ratio will be
70%. How large a sales increase can the
company achieve without having to raise
funds externally-that is, what is its self-
supporting growth rate? Do not round
intermediate calculations. Enter your
answer for sales increase in dollars. For
example, an answer of $2 million should
be entered as 2,000,000. Round the
monetary value to the nearest dollar and
percentage value to one decimal place.
Sales can increase by $
that is by
I
%.
Self-Supporting Growth Rate
Maggie's Muffins Bakery generated $4 million in sales during 2019, and its year-end total assets were $2.6 million. Also, at year-end 2019, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2020, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 6%, and its payout ratio will be 70%. How large a sales increase can the company achieve without having to raise funds externally—that is, what is its self-supporting growth rate? Do not round intermediate calculations. Enter your answer for sales increase in dollars. For example, an answer of $2 million should be entered as 2,000,000.Round the monetary value to the nearest dollar and percentage value to one decimal place.
Sales can increase by $ , that is by %.
Chapter 9 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 9 - Define each of the following terms:
Operating...Ch. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Broussard Skateboard’s sales are expected to...Ch. 9 - AFN Equation Refer to Problem 9-1. What would be...Ch. 9 - AFN Equation Refer to Problem 9-1. Return to the...Ch. 9 - Sales Increase Maggies Muffins Bakery generated 5...
Ch. 9 - Long-Term Financing Needed At year-end 2018,...Ch. 9 - Additional Funds Needed
The Booth Company’s sales...Ch. 9 - Forecasted Statements and Ratios Upton Computers...Ch. 9 - Financing Deficit
Stevens Textile Corporation’s...Ch. 9 - Prob. 9PCh. 9 - Hatfield Medical Supplys stock price had been...Ch. 9 - Prob. 2MCCh. 9 - Define the term capital intensity. Explain how a...
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