Broussard is already at full capacity, so its operating assets must grow at the same rate as projected sales. At the end of 2021, 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 3%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.
Broussard is already at full capacity, so its operating assets must grow at the same rate as projected sales. At the end of 2021, 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 3%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.
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:AFN equation
Broussard Skateboard's sales are expected to increase by 15% from $7 million
in 2021 to $8.05 million in 2022. Its perating assets were $2 million at the end
of 2021.
Broussard is already at full capacity, so its operating assets must grow at the
same rate as projected sales. At the end of 2021, 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 3%, and the forecasted payout ratio is 40%. Use the AFN equation to
forecast Broussard's additional funds needed for the coming year. Enter your
answer in dollars. For example, an answer of $1.2 million should be entered as
$1,200,000. Do not round intermediate calculations. Round your answer to the
nearest dollar.
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