How much is the increase in retained earnings that will contribute to cover the increase in asset?
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- Lux Co. recently reported sales of P100 million, and net income equal to P5 million. The company has P70 million in total assets. Over the next year, the company is forecasting a 25 percent increase in sales. Since the company is at full capacity, its assets must increase in proportion to sales. The company also estimates that if sales increase 20 percent, spontaneous liabilities will increase by P2.1 million. If the company’s sales increase, its profit margin will remain at its current level. The company’s dividend payout ratio is 45 percent. Based on the AFN formula, how much additional capital must the company raise in order to support the 20 percent increase in sales?Inc. recently reported net income of P5,000,0000. The firm has P40,000,000 total assets. Next year, Inc. is forecasting a 20% increase in sales. The firm also estimates that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention ratio is maintained at 75%. If the sales increase, the profit margin will remain at its current level. The company is operating at full capacity. How much is the increase in retained earnings that will contribute to cover the increase in asset? 36,000,000 750,000 3,750,000 4,500,000Suppose that Gyp Sum Industries currently has the balance sheet shown. below, and that sales for the year just ended were $9.5 million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent, and expects sales of $7.5 million next year.
- Sunny Co. recently reported sales of P100 million, and net income of P10 million. The firm has P80 million total assets. Next year, Sunny Co. is forecasting a 35% increase in sales. The firm also estimates that if sales increase by 35%, spontaneous liabilities will increase by P5 million. The dividend payout ratio is determined to be 30%. If the sales increase, the profit margin will remain at its current level. The company is at full capacity and assets must increase in direct proportion to sales. 1) How much is the increase in retained earnings? 2) using AFN, how much additional capital must the firm raise in order to support the forecasted percent increase in sales?Appalachian Registers, Inc. (ARI) has current sales of $50 million. Sales are expected to grow to $70 million next year. ARI currently has accounts receivable of $9 million, inventories of $15 million, and net fixed assets of $18 million. These assets are expected to grow at the same rate as sales over the next year. Accounts payable are expected to increase from their current level of $14 million to a new level of $18 million next year. ARI wants to increase its cash balance at the end of next year by $2 million over its current cash balances, which average $4 million. Earnings after taxes next year are forecasted to be $10 million. Next year, ARI plans to pay dividends of $2 million, up from $500,000 this year. ARI's marginal tax rate is 34 percent. How much external financing is required by ARI next year? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ millionSuppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $9.4 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments. Assets Current $2,294,000 Current liabilities Long-term debt Equity assets Fixed assets 5,402,000 Liabilities and Equity Total assets $7,696,000 Total liabilities and equity $2,368,000 1,700,000 3,628,000 $7,696,000 If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.) Additional funds needed
- Green Caterpillar Garden Supplies Inc. has the following end-of-year balance sheet: Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents Accounts payable Accounts receivable Accrued liabilities Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000ABC Inc. is a juice producer which has been growing steadily for the past 5 years. According to the expected market demand, the company is planning to grow its sales at 15% next year. Since the company is currently operating at full capacity, fixed assets will also grow proportional to sales, same as current assets and current liabilities. However, long-term debt and equity will not grow proportional to sales but rather management will decide upon thier next year level based on an acceptable level of debt to equity ratio as well as ROE ratio. The company has a dividend pay-out ratio of 40% which the management want to maintain in order to meet the shareholders expectations. Below are the financial statements of ABC Inc. for the year ending Sept 2020. Amounts in 000s Sep-20 Sales 5700 Costs 4200 Taxable Income 1500 Taxes (34%) 510 Net Income 990 Amounts in 000s Sept-20 Sept-20 Cash 200 Accounts Payable 2000 Accounts Receivables 1600 Accrued…(Financial forecasting—percent of sales) Next year’s sales for Cumberland Mfg. are expected to be $22 million. Current sales are $18 million, based on current assets of $5 million and fixed assets of $5 million. The firm’s net profit margin is 5 percent after taxes. Cumberland estimates that current assets will rise in direct proportion to the increase in sales but that its fixed assets will increase by only $150,000. Currently, Cumberland has $2 million in accounts payable (which vary directly with sales), $1 million in long-term debt (due in 10 years), and common equity (including $4 million in retained earnings) totaling $6.5 million. Cumberland plans to pay $750,000 in common stock dividends next year. Required: What are Cumberland’s total financing needs (that is, total assets) for the coming year? Given the firm’s projections and dividend payment plans, what are its discretionary financing needs? Based on your projections, and assuming that the $150,000 expansion in fixed assets…
- ABC Inc. is a juice producer which has been growing steadily for the past 5 years. According to the expected market demand, the company is planning to grow its sales at 15% next year. Since the company is currently operating at full capacity, fixed assets will also grow proportional to sales, same as current assets and current liabilities. However, long-term debt and equity will not grow proportional to sales but rather management will decide upon thier next year level based on an acceptable level of debt to equity ratio as well as ROE ratio. The company has a dividend pay-out ratio of 40% which the management want to maintain in order to meet the shareholders expectations. Below are the financial statements of ABC Inc. for the year ending Sept 2020. In addititon to the planned 15% growth of the next year, the company is considering a future mega project of introducing a new entire production line that can increase its market share by %. The company is planning for this expansion to…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.The Glexon mill has total assets of $91,600, current liabilities of $9,700, dividends paid of $2,000, net sales of $38,400, and net income of $5,400. Assume that all costs, assets, and current liabilities change spontaneously with sales. The tax rate and dividend payout ratios remain constant. If the firm's managers project a firm growth rate of 9 percent for next year, what will be the amount of external financing needed to support this level of growth? Assume the firm is currently operating at full capacity. Select one: a. EFN=6609$ b. EFN=3.609$ c. None of the other three answers d. EFN=3609$