2. Problem 17.02 (AFN Equation) eBook Carlsbad Corporation's sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%. Its assets totaled $3 million at the end of 2021. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2021, current liabilities are $1 Allion, 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 6%, and the forecasted retention ratio is 35%. Use the AFN equation forecast the additional funds Carlsbad will need for the coming year. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar. $ • to What additional funds would be needed if the company's year-end 2021 assets had been $4 million? Assume that all other numbers are the same. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar. $ Is the company's "capital intensity" the same or different comparing to initial situation? The firm's capital intensity ratio in the new situation is -Select- that in the initial one.
2. Problem 17.02 (AFN Equation) eBook Carlsbad Corporation's sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%. Its assets totaled $3 million at the end of 2021. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2021, current liabilities are $1 Allion, 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 6%, and the forecasted retention ratio is 35%. Use the AFN equation forecast the additional funds Carlsbad will need for the coming year. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar. $ • to What additional funds would be needed if the company's year-end 2021 assets had been $4 million? Assume that all other numbers are the same. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar. $ Is the company's "capital intensity" the same or different comparing to initial situation? The firm's capital intensity ratio in the new situation is -Select- that in the initial one.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:2. Problem 17.02 (AFN Equation)
eBook
Carlsbad Corporation's sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%. Its assets totaled $3 million at the end of 2021. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of
2021, current liabilities are $1 Allion, 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 6%, and the forecasted retention ratio is 35%. Use the AFN equation
forecast the additional funds Carlsbad will need for the coming year. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.
$
•
to
What additional funds would be needed if the company's year-end 2021 assets had been $4 million? Assume that all other numbers are the same. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to
the nearest dollar.
$
Is the company's "capital intensity" the same or different comparing to initial situation?
The firm's capital intensity ratio in the new situation is -Select-
that in the initial one.
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