Assume the company uses the AFN formula and all additional funds needed (AFN) will come from issuing new long-term debt. Given its forecast, how much long-term debt will the company have to issue in 2023? Lux Co. has the following balance sheet as of December 31, 2022
Assume the company uses the AFN formula and all additional funds needed (AFN) will come from issuing new long-term debt. Given its forecast, how much long-term debt will the company have to issue in 2023? Lux Co. has the following balance sheet as of December 31, 2022
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 103.1C: Leverage Cook Corporation issued financial statements at December 31, 2019, that include the...
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Assume the company uses the AFN formula and all additional funds needed (AFN) will come from issuing new long-term debt. Given its
Lux Co. has the following balance sheet as of December 31, 2022
![Current assets P 600,000 Accounts payable
400,000 Accrued liabilities
Notes payable
Long-term debt
Total common equity
P 100,000
100,000
100,000
300,000
400,000
P1.000,000 Total liabilities & equity P1.000.000
Fixed assets
Total assets
In 2022, the company reported sales of P5 million, net income of P100,000, and
dividends of P50,000. The company anticipates its sales will increase 25 percent in
2023 and its dividend payout will remain at 50 percent. Assume the company is at full
capacity, so its assets and spontaneous liabilities will increase proportionately with an
increase in sales.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb31f0719-e8ed-471a-a8d2-de464359c072%2F3f8c9b0b-2f91-4b9e-9147-0c377e71c979%2F5kj5dh_processed.png&w=3840&q=75)
Transcribed Image Text:Current assets P 600,000 Accounts payable
400,000 Accrued liabilities
Notes payable
Long-term debt
Total common equity
P 100,000
100,000
100,000
300,000
400,000
P1.000,000 Total liabilities & equity P1.000.000
Fixed assets
Total assets
In 2022, the company reported sales of P5 million, net income of P100,000, and
dividends of P50,000. The company anticipates its sales will increase 25 percent in
2023 and its dividend payout will remain at 50 percent. Assume the company is at full
capacity, so its assets and spontaneous liabilities will increase proportionately with an
increase in sales.
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