(Financial forecasting-percent of sales) Tulley Appliances, Inc. projects next year's sales to be $19.9 million. Current sales are at $15.3 million, based on current assets of $5.1 million and fixed assets of $4.9 million. The firm's net profit margin is 5.3 percent after taxes. Tulley forecasts that current assets will rise in direct proportion to the increase in sales, but fixed assets will increase by only $110,000. Currently, Tulley has $1.6 million in accounts payable (which vary directly with sales), $1.9 million in long-term debt (due in 10 years), and common equity (including $3.8 million in retained earnings) totaling $6.3 million. Tulley plans to pay $501,000 in common stock dividends next year. a. What are Tulley's total financing needs (that is, total assets) for the coming year? b. Given the firm's projections and dividend payment plans, what are its discretionary financing needs? c. Based on your projections, and assuming that the $110,000 expansion in fixed assets will occur, what is the largest increase in sales the firm can support without having to resort to the use of discretionary sources of financing? Estimate Tulley's financing needs by completing the pro forma balance sheet: (Round the percentages of sales to two decimal places and the balance sheet amounts to the nearest dollar.) Tulley Appliances, Inc. Pro Forma Balance Sheet Current assets Net fixed assets Total assets Accounts payables Long-term debt Total liabilities Paid-in capital $ $ $ Next Year % of Sales 19900000 5.3 % C %
(Financial forecasting-percent of sales) Tulley Appliances, Inc. projects next year's sales to be $19.9 million. Current sales are at $15.3 million, based on current assets of $5.1 million and fixed assets of $4.9 million. The firm's net profit margin is 5.3 percent after taxes. Tulley forecasts that current assets will rise in direct proportion to the increase in sales, but fixed assets will increase by only $110,000. Currently, Tulley has $1.6 million in accounts payable (which vary directly with sales), $1.9 million in long-term debt (due in 10 years), and common equity (including $3.8 million in retained earnings) totaling $6.3 million. Tulley plans to pay $501,000 in common stock dividends next year. a. What are Tulley's total financing needs (that is, total assets) for the coming year? b. Given the firm's projections and dividend payment plans, what are its discretionary financing needs? c. Based on your projections, and assuming that the $110,000 expansion in fixed assets will occur, what is the largest increase in sales the firm can support without having to resort to the use of discretionary sources of financing? Estimate Tulley's financing needs by completing the pro forma balance sheet: (Round the percentages of sales to two decimal places and the balance sheet amounts to the nearest dollar.) Tulley Appliances, Inc. Pro Forma Balance Sheet Current assets Net fixed assets Total assets Accounts payables Long-term debt Total liabilities Paid-in capital $ $ $ Next Year % of Sales 19900000 5.3 % C %
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
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Transcribed Image Text:(Financial forecasting percent of sales) Tulley Appliances, Inc. projects next year's sales to be $19.9 million. Current sales are at $15.3 million, based on current assets of $5.1 million and fixed
assets of $4.9 million. The firm's net profit margin is 5.3 percent after taxes. Tulley forecasts that current assets will rise in direct proportion to the increase in sales, but fixed assets will increase by
only $110,000. Currently, Tulley has $1.6 million in accounts payable (which vary directly with sales), $1.9 million in long-term debt (due in 10 years), and common equity (including $3.8 million in
retained earnings) totaling $6.3 million. Tulley plans to pay $501,000 in common stock dividends next year.
a. What are Tulley's total financing needs (that is, total assets) for the coming year?
b. Given the firm's projections and dividend payment plans, what are its discretionary financing needs?
c. Based on your projections, and assuming that the $110,000 expansion in fixed assets will occur, what is the largest increase in sales the firm can support without having to resort to the use of
discretionary sources of financing?
Estimate Tulley's financing needs by completing the pro forma balance sheet: (Round the percentages of sales to two decimal places and the balance sheet amounts to the nearest dollar.)
Tulley Appliances, Inc.
Pro Forma Balance Sheet
Current assets
Net fixed assets
Total assets
Accounts payables
Long-term debt
Total liabilities
Paid-in capital
Retained earnings
Common equity
Total liabilities and common equity
GA
GA
GA
SA
SA
Next Year % of Sales
19900000
5.3 %
%
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