Problem 17-1: AFN EQUATION Carter Corporation’s
Click
Link Below To Buy:
Contact
Us:
Hwcoursehelp@gmail.com
Problem
17-1: AFN EQUATION 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.
AFN
EQUATION Refer to Problem 17-1. What additional funds
would be needed if the company’s year-end 2008 assets had been $4 million? Assume
that all other numbers are the same. Why is this AFN different from the one you
found in Problem 17-1? Is the company’s “capital intensity” the same or
different? Explain.
No comments:
Post a Comment