and the shares are supposed to remain Ordinary notes and notes payable unchanged The following are the ratios between sales and budget items that change directly with sales and are expected to remain constant in the future Cash 4%, Profit Margin 3%, Arrears 6%, Accounts Payable 12%, Net Fixed Assets 35%, Inventory 20% accounts receivable 10% note that the notes payable 630 thousand and ordinary shares 5,250 thousand Required 1- Completion of the balance sheet for the year 2010 2- What are the external financial needs in 2011 3- What is the percentage of increase in sales that must be financed externally
and the shares are supposed to remain Ordinary notes and notes payable unchanged The following are the ratios between sales and budget items that change directly with sales and are expected to remain constant in the future Cash 4%, Profit Margin 3%, Arrears 6%, Accounts Payable 12%, Net Fixed Assets 35%, Inventory 20% accounts receivable 10% note that the notes payable 630 thousand and ordinary shares 5,250 thousand Required 1- Completion of the balance sheet for the year 2010 2- What are the external financial needs in 2011 3- What is the percentage of increase in sales that must be financed externally
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:The sales of the Arab Guarantor
Company amounted to 12 million
dinars in 2010 and is expected to grow
at a rate of 10% in 2011. The company
follows a policy of distributing 50%
of the net profits to shareholders.
The company had retained earnings
of 60 thousand at the end of 2009,
and the shares are supposed to
remain Ordinary notes and notes
payable unchanged The following are
the ratios between sales and budget
items that change directly with sales
and are expected to remain constant
in the future Cash 4%, Profit Margin
3%, Arrears 6%, Accounts Payable
12%, Net Fixed Assets 35%, Inventory
20% accounts receivable 10% note
that the notes payable 630 thousand
and ordinary shares 5,250 thousand
Required 1- Completion of the balance
sheet for the year 2010 2- What are
the external financial needs in 2011 3-
What is the percentage of increase in
sales that must be financed externally
4- Preparing an estimated budget For
the year 2011, the use of an additional
account for financial needs 5 - What
happens to the external financial needs
under each of the following conditions.
An increase in the profit margin from
3% to 6% · An increase in the dividend
distribution rate from 50% to 80%
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