Additional Funds NeededThe Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the December 31,2019, balance sheet:CashAccounts receivableInventories$100Net fixed assets200200Accounts payableNotes payableAccruals500$50150Long-term debtCommon stockRetained earningsTotal assets$1,000Total liabilities and equity$1,000Booth's fixed assets were used to only 50% of capacity during 2019, but its current assets were at their proper levels inrelation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have toincrease at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 8%and its payout ratio to be 45%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer tothe nearest dollar.$50400100250

AFN is used in the business for the purpose of expanding it if the sufficient earnings are not…

The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the D 2019, balance sheet: Cash Accounts receivable Inventories Net fixed assets Total assets $100 200 200 500 $1,000 Accounts payable Notes payable Accruals Long-term debt Common stock Retained earnings Total liabilities and equity $50 150 50 400 100 250 $1,000

The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the D 2019, balance sheet: Cash Accounts receivable Inventories Net fixed assets Total assets $100 200 200 500 $1,000 Accounts payable Notes payable Accruals Long-term debt Common stock Retained earnings Total liabilities and equity $50 150 50 400 100 250 $1,000

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter16: Financial Planning And Forecasting

Section: Chapter Questions

Problem 13P: ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.s 2019 financial statements are shown here....

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ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.s 2019 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of December 31, 2019 Morrissey Technologies Inc.: Income Statement for December 31, 2019 Suppose that in 2020, sales increase by 10% over 2019 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2019 dividend payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would like to reduce its operating costs/sales ratio to 87.5% and increase its total liabilities-to-assets ratio to 30%. (It believes its liabilities-to-assets ratio currently is too low relative to the industry average.) The firm will raise 30% of the 2020 forecasted interest-bearing debt as notes payable, and it will issue long-term bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short- and long-term debt) is 12.5%. Assume that any common stock issuances or repurchases can be made at the firms current stock price of 45. a. Construct the forecasted financial statements assuming that these changes are made. What are the firms forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnings? b. If the profit margin remains at 6.25% and the dividend payout ratio remains at 60%, at what growth rate in sales will the additional financing requirements be exactly zero? In other words, what is the firms sustainable growth rate? (Hint: Set AFN equal to zero and solve for g.)
Additional Funds Needed The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the December 31, 2019, balance sheet: Cash Accounts receivable Inventories Net fixed assets $100 200 200 500 Accounts payable Notes payable Accruals Long-term debt Common stock Retained earnings Total liabilities and equity $ 50 150 50 400 100 250 $1,000 Total assets $1,000 Booth's fixed assets were used to only 50% of capacity during 2019, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 5% and its payout ratio to be 50%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar. $ Check My Work
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