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4. More on the AFN equation Input Inc. reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 7%. Input Inc. expects to maintain its current profit margin of 24% and dividend payout ratio of 30%. The following information was taken from Input Inc.'s balance sheet: Total assets: $450,000 Accounts payable: $60,000 Notes payable: $45,000 Accrued liabilities: $80,000 Based on the additional funds needed (AFN) equation, the firm's AFN for the past year is A positive AFN value represents: A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements Because of its excess funds, Input Inc. is thinking about raising its dividend payout ratio to satisfy shareholders. Input Inc. could pay out of its earnings to shareholders without needing to raise any external capital. (Hint: What can Input Inc. increase its dividend payout ratio to before the AFN becomes positive?)

4. More on the AFN equation Input Inc. reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 7%. Input Inc. expects to maintain its current profit margin of 24% and dividend payout ratio of 30%. The following information was taken from Input Inc.'s balance sheet: Total assets: $450,000 Accounts payable: $60,000 Notes payable: $45,000 Accrued liabilities: $80,000 Based on the additional funds needed (AFN) equation, the firm's AFN for the past year is A positive AFN value represents: A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements Because of its excess funds, Input Inc. is thinking about raising its dividend payout ratio to satisfy shareholders. Input Inc. could pay out of its earnings to shareholders without needing to raise any external capital. (Hint: What can Input Inc. increase its dividend payout ratio to before the AFN becomes positive?)

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
Problem 11MCQ: Chasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital...
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4. More on the AFN equation Input Inc. reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 7%. Input Inc. expects to maintain its current profit margin of 24% and dividend payout ratio of 30%. The following information was taken from Input Inc.'s balance sheet: Total assets: $450,000 Accounts payable: $60,000 Notes payable: $45,000 Accrued liabilities: $80,000 Based on the additional funds needed (AFN) equation, the firm's AFN for the past year is A positive AFN value represents: A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements Because of its excess funds, Input Inc. is thinking about raising its dividend payout ratio to satisfy shareholders. Input Inc. could pay out of its earnings to shareholders without needing to raise any external capital. (Hint: What can Input Inc. increase its dividend payout ratio to before the AFN becomes positive?)
Transcribed Image Text:4. More on the AFN equation Input Inc. reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 7%. Input Inc. expects to maintain its current profit margin of 24% and dividend payout ratio of 30%. The following information was taken from Input Inc.'s balance sheet: Total assets: $450,000 Accounts payable: $60,000 Notes payable: $45,000 Accrued liabilities: $80,000 Based on the additional funds needed (AFN) equation, the firm's AFN for the past year is A positive AFN value represents: A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements Because of its excess funds, Input Inc. is thinking about raising its dividend payout ratio to satisfy shareholders. Input Inc. could pay out of its earnings to shareholders without needing to raise any external capital. (Hint: What can Input Inc. increase its dividend payout ratio to before the AFN becomes positive?)
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