The booth company’s sales | Business & Finance homework help

1. Additional Funds Needed
The Booth Company’s sales are forecasted to double from $1,000 in 2012 to $2,000 in 2013. Here is the December 31, 2012, balance sheet:
Cash $ 100 Accounts payable $ 50
Accounts receivable 200 Notes payable 150
Inventories 200 Accruals 50
Net fixed assets 500 Long-term debt 400
Common stock 100
Retained earnings 250
Total assets $1000 Total liabilities and equity $1000
Booth’s fixed assets were used to only 50% of capacity during 2012, but its current assets were at their proper levels in relation to sales. Spontaneous liabilities and all assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth’s after-tax profit margin is forecasted to be 7% and its payout ratio to be 70%. What is Booth’s additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar.$

2. AFN equation
Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $5 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2013, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 55%. What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar.
$
Assume that the company’s year-end 2013 assets had been $4 million. Is the company’s “capital intensity” ratio the same or different?

I. The capital intensity ratio is measured as A0*/S0. Broussard’s capital intensity ratio is lower than that of the firm with $4 million year-end 2013 assets; therefore, Broussard is more capital intensive – it would require a smaller increase in total assets to support the increase in sales.
II. The capital intensity ratio is measured as A0*/S0. Broussard’s capital intensity ratio is higher than that of the firm with $4 million year-end 2013 assets; therefore, Broussard is less capital intensive – it would require a smaller increase in total assets to support the increase in sales.
III. The capital intensity ratio is measured as A0*/S0. Broussard’s capital intensity ratio is higher than that of the firm with $4 million year-end 2013 assets; therefore, Broussard is more capital intensive – it would require a larger increase in total assets to support the increase in sales.
IV. The capital intensity ratio is measured as A0*/S0. Broussard’s capital intensity ratio is lower than that of the firm with $4 million year-end 2013 assets; therefore, Broussard is more capital intensive – it would require a larger increase in total assets to support the increase in sales.

3.AFN Equation Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $4 million at the end of 2013. Baxter is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2013, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%. Assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Do not round intermediate calculations. Round your answer to the nearest dollar.
$
Why is this AFN different from the one when the company pays dividends?

I. Under this scenario the company would have a lower level of retained earnings which would reduce the amount of additional funds needed.
II. Under this scenario the company would have a lower level of retained earnings but this would have no effect on the amount of additional funds needed.
III. Under this scenario the company would have a higher level of retained earnings which would reduce the amount of additional funds needed.
IV. Under this scenario the company would have a higher level of retained earnings which would increase the amount of additional funds needed.
V. Under this scenario the company would have a higher level of retained earnings but this would have no effect on the amount of additional funds needed.
4.Sales Increase
Maggie’s Muffins, Inc., generated $4,000,000 in sales during 2013, and its year-end total assets were $2,400,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2014, 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 4%, 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 steps. Round your answers to the nearest whole.
Sales can increase by $ , that is by %.
5.Long-Term Financing Needed
At year-end 2013, Wallace Landscaping’s total assets were $1.8 million and its accounts payable were $415,000. Sales, which in 2013 were $2.6 million, are expected to increase by 30% in 2014. 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 $470,000 in 2013, and retained earnings were $345,000. Wallace has arranged to sell $50,000 of new common stock in 2014 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 2014. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its profit margin on sales is 4%, and 35% of earnings will be paid out as dividends.
1. What was Wallace’s total long-term debt in 2013? Round your answer to the nearest dollar.
$
What were Wallace’s total liabilities in 2013? Round your answer to the nearest dollar.
$
2. How much new long-term debt financing will be needed in 2014? (Hint: AFN – New stock = New long-term debt.) Round your answer to the nearest dollar.
$
6.Additional Funds Needed
The Booth Company’s sales are forecasted to double from $1,000 in 2012 to $2,000 in 2013. Here is the December 31, 2012, balance sheet:

Cash $ 100 Accounts payable $ 50
Accounts receivable 200 Notes payable 150
Inventories 200 Accruals 50
Net fixed assets 500 Long-term debt 400
Common stock 100
Retained earnings 250
Total assets $1000 Total liabilities and equity $1000

Booth’s fixed assets were used to only 50% of capacity during 2012, but its current assets were at their proper levels in relation to sales. Spontaneous liabilities and 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 7% and its payout ratio to be 70%. What is Booth’s additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar.

Get 20% Discount on This Paper
Pages (550 words)
Approximate price: -

Try it now!

Get 20% Discount on This Paper

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Custom Writings Help is a Quality-Oriented Company in Online Writing as a result of hiring exceptional professionals to execute clients' tasks.

Essays

Research Papers

At Custom Writings Help,We understand the struggle of research paper writing, and that is why at Custom WritingS Help, we are all out to help you. We pride ourselves on having a team of clinical writers. The stringent and rigorous vetting process ensures that only the 'BEST' Writers are chosen for the job. We have highly qualified Ph.D. and MA writers working with us; we equally offer these experienced writers specific bonuses and incentives to make them deliver highly original, unique, and informative content at reasonably low prices.

Admissions

Thesis Writing Service

Worlwide, Many Masters Students are struggling with Thesis Completion. A thesis is likely to be the longest and most challenging piece of work a student has ever completed. However, unlike essays and other assignments, a student can pick a particular interest topic and work on their initiative. Fortunately, we are there for you. At Custom Writings Help, you are assured of an authentic, imaginative, informative, linguistically great, and advantageous thesis that adheres to all your needs. So, why continue considering different writers when you have discovered the best in the field?

Editing

Custom Papers

Not a single student can avoid writing custom papers. However, a total lack of experience, skills, and time makes it very hard to produce a superb writing piece. Therefore, if you are seeking professional help, turn to us. Our specialized and experienced writers compose a variety of model papers, including custom essays, college term papers, research papers, book reports, MBA essays, executive summaries, dissertations, Ph.D. theses, admission essays, and research proposals for college and university students at any level.

Coursework

Essay Writing

Most of the students disregard the critical principles of essay writing and compose papers below sensible guidelines. Therefore, with Custom Writings Help, one should not worry about his/her essay. Our Writers compose informative and engaging content on all complexities and topics. We write meaningful and smart essays while prioritizing all aspects that bring about a good grade, such as impeccable grammar, proper structure, zero-plagiarism, and conformance to guidelines.

Coursework

Coourse Work Writing

Don't let the seemingly never-ending onslaught of writing assignments get you down. If you are looking where to get course work assistance online, the writers at Custom Writings Help are here to assist you with all of your writing needs. We undertake to unique delivery of papers that meet the professor's requirements. The content is proofread, edited, and checked plagiarism before submission to customers. No matter how big or small your work is, we will deliver on time. Try US Now! !

Coursework

Dissertation Writing Service

High-Quality Dissertation Writing Services are rare. They require Ph.D. academicians – not easily found. However, are an exception. The years, time, and resources we have invested in the dissertation world has given us a competitive advantage over others. Choose to come to Custom Writings Help; You will find perfect Ph.D. consultants who have written hundreds of dissertations theses ready to help you. Let our dissertation-writing services help you craft your dissertation, for you are assured we will give you the results.