AFN equationBroussard Skateboard's sales are expected to increase by 15 % from $7.6 million in 2019 to $8.74 million in 2020. Its assets totaled $5 million at the end of2019.Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, 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 4%, and theforecasted payout ratio is 60%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. Forexample, 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.

AFN equation is used to calculate additional funding required for keeping growth in sales.Total…

Answered: Broussard Skateboard's sales are…

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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Assume that today is December 31, 2019, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2020 is expected to be $650 million. The depreciation expense for 2020 is expected to be $70 million. The capital expenditures for 2020 are expected to be $250 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 7% per year. The required return on equity is 15%. The WACC is 11%. The firm has $198 million of non-operating assets. The market value of the company's debt is $3.450 billion. 330 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
ABC Insurance has paid losses of $50M during calendar year 2019 and case reserves at the end of the year totaling $60M. Management estimates ultimate losses on these open reserves will be $200M. What are bulk loss reserves at the end of the year?
Carlsbad Corporation's sales are expected to increase from $5 million in 2019 to $6 million in 2020, or by 20%. Its assets totaled $3 million at the end of 2019. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $1 million, 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%. a. Assume that the company pays no dividends. Use the AFN equation to 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. b. Why is this AFN different from the one when the company pays dividends? I. Under this scenario the company would have a lower level of retained earnings, which would decrease the amount of additional funds needed. II. Under this scenario the company would have a higher…
The Tigers Inc.'s sales are forecasted to double from $900 in 2020 to $1800 in 2021 (that is, a 100% increase). The 2020 Balance sheet for Tigers Inc., is shown here: 2020 Balance Sheet Cash $ 50 Account payable $ 100 Account receivable 250 Notes payable $ 150 $ $ $ $ $ Inventories 250 Long-term debt 400 Net fixed assets 500 Common stock 150 Retained earnings 250 Total assets $ 1,050 Total liabilities and equity 2$ 1,050 Assume that Tigers' fixed assets were used to 100% capacity and that its current assets were at their proper levels in relation to sales. Tigers' after-tax profit margin (i.e. NI/ Sales) is forecasted to be 8% and its payout ratio to be 40%. $ 900 $ 1,800 Sales 2020 = Sales 2021 = NI/Sales = Payout ratio = 8% 50% What is Tigers' additional funds needed (AFN) for 2021? Round your answer to the nearest dollar.
AFN equation Broussard Skateboard's sales are expected to increase by 15% from $7.8 million in 2019 to $8.97 million in 2020. Its assets totaled $5 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, 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 6%, and the forecasted payout ratio is 50%. 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. $
AFN equation Broussard Skateboard's sales are expected to increase by 20% from $7.0 million in 2019 to $8.40 million in 2020. Its assets totaled $3 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, 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 5%, and the forecasted payout ratio is 65%. 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 Skateboard's sales are expected to increase by 20% from $8.6 million in 2019 to $10.32 million in 2020. Its assets totaled $3 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, 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 6%, and the forecasted payout ratio is 60%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. $______
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Broussard Skateboard's sales are expected to increase by 25% from $7.2 million in 2019 to $9.00 million in 2020. Its assets totaled $5 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450000 of accounts payable, $500000 of notes payable, and $450000 of accruals. The after-tax profit margin is forecasted to be 3%, and the forecasted payout ratio is 55%. 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.
Tallinn Financial forecasts €200,000 in net income next fiscal year and ending total assets for €600,000. Tallinn pays 60% of its net income out in dividends. Tallinn’s current shareholder equity €240,000 and current liabilities are €100,000. Current liabilities are forecast to increase by €20,000 and debt (long-term) is expected to remain constant. What is Tallinn’s net new financing needed next year?
Flingen Inc. reveals the following information in their annual report for FY 2021 Selected Income Statement Items: Sales $9,000,000 Cost of goods sold $5,000,000 Pretax earnings $500,000 Selected Balance Sheet Items: Merchandise inventory $80,000 Total assets $2,000,000 What is Flingen's projected profit margin for 2022, assuming they plan to reduce cost of goods sold by 5.0% for the coming year while maintaining the same sales revenue? (Please round answer to nearest whole percentage). Group of answer choices 9% 10% 8% 7%
AFN equation Broussard Skateboard's sales are expected to increase by 15% from $8.8 million in 2019 to $10.12 million in 2020. Its assets totaled $5 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, 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 70%. 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. A

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