Carlsbad Corporation's sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%. Its assets totaled $2 million at the end of 2021. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2021, 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 4%, and the forecasted retention ratio is 40%. 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. $ 189,333 What additional funds would be needed if the company's year-end 2021 assets had been $3 million? Assume that all other numbers are the same. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar. $ Is the company's "capital intensity" the same or different comparing to initial situation? The firm's capital intensity ratio in the new situation is higher than that in the initial one.
Carlsbad Corporation's sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%. Its assets totaled $2 million at the end of 2021. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2021, 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 4%, and the forecasted retention ratio is 40%. 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. $ 189,333 What additional funds would be needed if the company's year-end 2021 assets had been $3 million? Assume that all other numbers are the same. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar. $ Is the company's "capital intensity" the same or different comparing to initial situation? The firm's capital intensity ratio in the new situation is higher than that in the initial one.
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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Question
86.
Subject : - Finance
Transcribed Image Text:Carlsbad Corporation's sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%. Its assets totaled $2 million at
the end of 2021. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2021, 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 4%, and the forecasted retention ratio is 40%. 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.
$
189,333
What additional funds would be needed if the company's year-end 2021 assets had been $3 million? Assume that all other numbers are the
same. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.
$
Is the company's "capital intensity" the same or different comparing to initial situation?
The
firm's capital intensity ratio in the new situation is higher than
that in the initial one.
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