Green Moose Company has the following end-of-year balance sheet: Green Moose Company Balance Sheet For the Year Ended on December 31 Assets   Liabilities   Current Assets:   Current Liabilities:   Cash and equivalents $150,000 Accounts payable $250,000 Accounts receivable 400,000 Accrued liabilities 150,000 Inventories 350,000 Notes payable 100,000 Total Current Assets $900,000 Total Current Liabilities $500,000 Net Fixed Assets:   Long-Term Bonds 1,000,000 Net plant and equipment $2,100,000 Total Debt $1,500,000 (cost minus depreciation)           Common Equity       Common stock 800,000     Retained earnings 700,000     Total Common Equity $1,500,000 Total Assets $3,000,000 Total Liabilities and Equity $3,000,000   The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Green Moose Company generated $350,000 net income on sales of $13,000,000. The firm expects sales to increase by 16% this coming year and also expects to maintain its long-run dividend payout ratio of 40%. Suppose Green Moose Company’s assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Green Moose Company’s expected sales. (Note: Do not round intermediate calculations.) $456,000   $504,000   $480,000   $384,000     When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Green Moose Company this year? (Note: Do not round intermediate calculations.) $60,800   $64,000   $67,200   $51,200     In addition, Green Moose Company is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise externally from the capital markets. Assume that the firm’s profit margin and dividend payout ratio are expected to remain constant. Given the preceding information, Green Moose Company is expected to generate $   from operations that will be added to retained earnings. (Note: Do not round intermediate calculations.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Green Moose Company has the following end-of-year balance sheet:
Green Moose Company Balance Sheet For the Year Ended on December 31
Assets   Liabilities  
Current Assets:   Current Liabilities:  
Cash and equivalents $150,000 Accounts payable $250,000
Accounts receivable 400,000 Accrued liabilities 150,000
Inventories 350,000 Notes payable 100,000
Total Current Assets $900,000 Total Current Liabilities $500,000
Net Fixed Assets:   Long-Term Bonds 1,000,000
Net plant and equipment $2,100,000 Total Debt $1,500,000
(cost minus depreciation)      
    Common Equity  
    Common stock 800,000
    Retained earnings 700,000
    Total Common Equity $1,500,000
Total Assets $3,000,000 Total Liabilities and Equity $3,000,000
 
The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Green Moose Company generated $350,000 net income on sales of $13,000,000. The firm expects sales to increase by 16% this coming year and also expects to maintain its long-run dividend payout ratio of 40%.
Suppose Green Moose Company’s assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Green Moose Company’s expected sales. (Note: Do not round intermediate calculations.)
$456,000
 
$504,000
 
$480,000
 
$384,000
 
 
When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Green Moose Company this year? (Note: Do not round intermediate calculations.)
$60,800
 
$64,000
 
$67,200
 
$51,200
 
 
In addition, Green Moose Company is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise externally from the capital markets. Assume that the firm’s profit margin and dividend payout ratio are expected to remain constant.
Given the preceding information, Green Moose Company is expected to generate $
 
from operations that will be added to retained earnings. (Note: Do not round intermediate calculations.)
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