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. Assets Cash Accounts receivable Inventory Current assets Capital assets Total assets Assets (Click to select) (Click to select) (Click to select) Current assets. (Click to select) Total assets $7 11 20 38 38 The firm has an aftertax profit margin of 9 percent and a dividend payout ratio of 35 percent. a. If sales grow by 20 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 $ Current ratio Total debt / assets + + + Balance Sheet (in $ millions) 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 liabilities in order of their liquidity. Enter the answers in millions. Round the final answers to 2 decimal places.) Liabilities and Shareholders' Equity Accounts payable. Accrued wages Accrued taxes million in external funds. Current liabilities. Long-term debt Common stock Retained earnings $76 Total liabilities and shareholders' equity $76 Year 1 X % Balance Sheet ($ millions) (Click to select) (Click to select) (Click to select) $6 5 |||| Current liabilities (Click to select) (Click to select) (Click to select) Liabilities and Shareholders' Equity Total liabilities and shareholders' equity Year 2 X % 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.) $ $ $ 000 10000
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. Assets Cash Accounts receivable Inventory Current assets Capital assets Total assets Assets (Click to select) (Click to select) (Click to select) Current assets. (Click to select) Total assets $7 11 20 38 38 The firm has an aftertax profit margin of 9 percent and a dividend payout ratio of 35 percent. a. If sales grow by 20 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 $ Current ratio Total debt / assets + + + Balance Sheet (in $ millions) 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 liabilities in order of their liquidity. Enter the answers in millions. Round the final answers to 2 decimal places.) Liabilities and Shareholders' Equity Accounts payable. Accrued wages Accrued taxes million in external funds. Current liabilities. Long-term debt Common stock Retained earnings $76 Total liabilities and shareholders' equity $76 Year 1 X % Balance Sheet ($ millions) (Click to select) (Click to select) (Click to select) $6 5 |||| Current liabilities (Click to select) (Click to select) (Click to select) Liabilities and Shareholders' Equity Total liabilities and shareholders' equity Year 2 X % 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.) $ $ $ 000 10000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Carter Paint Company has plants in four provinces. Sales last year were $100 million, and the balance sheet 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.
Assets
Cash
Accounts receivable
Inventory
Current assets
Capital assets
Total assets
Assets
(Click to select)
(Click to select)
(Click to select)
Current assets
(Click to select)
Total assets
The firm has an aftertax profit margin of 9 percent and a dividend payout ratio of 35 percent.
a. If sales grow by 20 percent next year, determine how many dollars of new 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 $
Current ratio
Total debt /
assets
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 liabilities in order of
their liquidity. Enter the answers in millions. Round the final answers to 2 decimal places.)
+
+
+
20
38
38
♦
$7
Accounts payable
11 Accrued wages
Accrued taxes
million in external funds.
Balance Sheet
(in $ millions)
Liabilities and Shareholders' Equity
Current liabilities
Long-term debt
Common stock
Retained earnings
$76 Total liabilities and shareholders' equity $76
Year 1
X
%
Balance Sheet
($ millions)
៩៨៩ថ ន ហ តោ
(Click to select)
(Click to select)
(Click to select)
Liabilities and Shareholders' Equity
Current liabilities
(Click to select)
(Click to select)
(Click to select)
Total liabilities and shareholders' equity
Year 2
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.)
X
%
$
$
$
$
000 000
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