i) Estimate Mencias Corp. total financing requirements (total assets). ii) What is Mencias Corp. net funding requirements (discretionary financing needed) for 2022?
i) Estimate Mencias Corp. total financing requirements (total assets). ii) What is Mencias Corp. net funding requirements (discretionary financing needed) for 2022?
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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Transcribed Image Text:B. Mencias Corp. is evaluating its financing requirements for the coming year, 2023. The CFO predicts that the firm's
operating expenses, current assets, net fixed assets, and current liabilities will remain at their current proportion of sales.
Last year (2022) Mencias Corp. had $12 million in sales with net income of $1.5 million. The firm anticipates that next year's
sales will reach $17 million with net income rising to $2.125 million. Given its present high rate of growth, the firm retains all
of its earnings to help defray the cost of new investments. The firm's balance sheet for the year just ended is as follows:
Balance Sheet
2022
% of Sales
Current assets
$3,000,000
25%
Net fixed assets
$6,000,000
50%
Total Assets
$9,000,000
Liabilities and Owners' Equity
Accounts payable
$3,000,000
25%
$2,000,000
ΝΑ
Long-term debt
Total liabilities
$5,000,000
Common stock
$1,000,000
Paid-in capital
$1,500,000
Retained earnings.
$1,500,000
Common equity
$4,000,000
Total
$9,000,000
NA
NA
Transcribed Image Text:i) Estimate Mencias Corp. total financing requirements (total assets).
ii)
What is Mencias Corp. net funding requirements (discretionary financing needed) for 2022?
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