Carter Paint Company has plants in four provinces. Sales last year were $100 million, and the balance sheet at year-end is similar in percent of sales to that of previous years (and this will continue in the future). All assets and current liabilities will vary directly with sales. Assume the firm is already using capital assets at full capacity. Balance Sheet (in $ millions) Assets Liabilities and Shareholders' Equity Cash $4 Accounts payable Accounts receivable 9 Accrued wages Inventory Current assets Capital assets 30 Accrued taxes 43 Current liabilities 43 Long-term debt Common stock Retained earnings $86 Total assets Total liabilities and shareholders' equity ||||| $5 10 10 15 51 $86 The firm has an aftertax profit margin of 4 percent and a dividend payout ratio of 20 percent. a. If sales grow by 15 percent next year, determine how many dollars of new funds are needed to finance the expansion. (Do not round Intermediate calculations. Enter the answer in millions. Round the final answer to 3 decimal places.) The firm needs $[ million in external funds. b. Prepare a pro forma balance sheet with any financing adjustment made to long-term debt (Do not round Intermediate calculations. Input all answers as positive values. Be sure to list the assets and llablilties in order of their liquidity. Enter the answers in millions. Round the final answers to 2 decimal places.) (Click to select) (Click to select) (Click to select) Current assets (Click to select) Total assets Balance Sheet ($ millions) Assets Liabilities and Shareholders' Equity $ (Click to select) $ (Click to select) (Click to select) Current liabilities $ (Click to select) (Click to select) $ (Click to select) Total liabilities and shareholders' equity $ c. Calculate the current ratio and total debt to assets ratio for each year. (Do not round Intermediate calculations. Round the final answers to 1 decimal places.) Current ratio Total debt assets Year 1 Year 2 X X
Carter Paint Company has plants in four provinces. Sales last year were $100 million, and the balance sheet at year-end is similar in percent of sales to that of previous years (and this will continue in the future). All assets and current liabilities will vary directly with sales. Assume the firm is already using capital assets at full capacity. Balance Sheet (in $ millions) Assets Liabilities and Shareholders' Equity Cash $4 Accounts payable Accounts receivable 9 Accrued wages Inventory Current assets Capital assets 30 Accrued taxes 43 Current liabilities 43 Long-term debt Common stock Retained earnings $86 Total assets Total liabilities and shareholders' equity ||||| $5 10 10 15 51 $86 The firm has an aftertax profit margin of 4 percent and a dividend payout ratio of 20 percent. a. If sales grow by 15 percent next year, determine how many dollars of new funds are needed to finance the expansion. (Do not round Intermediate calculations. Enter the answer in millions. Round the final answer to 3 decimal places.) The firm needs $[ million in external funds. b. Prepare a pro forma balance sheet with any financing adjustment made to long-term debt (Do not round Intermediate calculations. Input all answers as positive values. Be sure to list the assets and llablilties in order of their liquidity. Enter the answers in millions. Round the final answers to 2 decimal places.) (Click to select) (Click to select) (Click to select) Current assets (Click to select) Total assets Balance Sheet ($ millions) Assets Liabilities and Shareholders' Equity $ (Click to select) $ (Click to select) (Click to select) Current liabilities $ (Click to select) (Click to select) $ (Click to select) Total liabilities and shareholders' equity $ c. Calculate the current ratio and total debt to assets ratio for each year. (Do not round Intermediate calculations. Round the final answers to 1 decimal places.) Current ratio Total debt assets Year 1 Year 2 X X
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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help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working!
Transcribed Image Text:Carter Paint Company has plants in four provinces. Sales last year were $100 million, and the balance sheet at year-end is similar in
percent of sales to that of previous years (and this will continue in the future). All assets and current liabilities will vary directly with
sales. Assume the firm is already using capital assets at full capacity.
Balance Sheet
(in $ millions)
Assets
Liabilities and Shareholders' Equity
Cash
$4
Accounts payable
Accounts receivable
9
Accrued wages
Inventory
Current assets
Capital assets
30
Accrued taxes
43
Current liabilities
43
Long-term debt
Common stock
Retained earnings
$86
Total assets
Total liabilities and shareholders' equity
|||||
$5
10
10
15
51
$86
The firm has an aftertax profit margin of 4 percent and a dividend payout ratio of 20 percent.
a. If sales grow by 15 percent next year, determine how many dollars of new funds are needed to finance the expansion. (Do not
round Intermediate calculations. Enter the answer in millions. Round the final answer to 3 decimal places.)
The firm needs $[
million in external funds.
b. Prepare a pro forma balance sheet with any financing adjustment made to long-term debt (Do not round Intermediate
calculations. Input all answers as positive values. Be sure to list the assets and llablilties in order of their liquidity. Enter the
answers in millions. Round the final answers to 2 decimal places.)
(Click to select)
(Click to select)
(Click to select)
Current assets
(Click to select)
Total assets
Balance Sheet
($ millions)
Assets
Liabilities and Shareholders' Equity
$
(Click to select)
$
(Click to select)
(Click to select)
Current liabilities
$
(Click to select)
(Click to select)
$
(Click to select)
Total liabilities and shareholders' equity
$
c. Calculate the current ratio and total debt to assets ratio for each year. (Do not round Intermediate calculations. Round the final
answers to 1 decimal places.)
Current ratio
Total debt assets
Year 1
Year 2
X
X
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