In your internship with Lewis, Lee, & Taylor Inc. you have been asked to forecast the firm's additional funds needed (AFN) for next year. The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Last year's sales = S0$200,000Last year's accounts payable$50,000Sales growth rate = g40%Last year's notes payable$15,000Last year's total assets = A0*$135,000Last year's accruals$20,000Last year's profit margin = PM20.0%Target payout ratio25.0% Select the correct answer. a. - $16,060 b. - $16,040 c. - $16,020 d. - $16,000 e. - $15,980

Increase in Total assets=Last years assets×Growth rate=$135,000×40%=$54,000

Answered: In your internship with Lewis, Lee, &…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In your internship with Lewis, Lee, & Taylor Inc. you have been asked to forecast the firm's additional funds needed (AFN) for next year. The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year?

Last year's sales = S₀	$200,000	Last year's accounts payable	$50,000
Sales growth rate = g	40%	Last year's notes payable	$15,000
Last year's total assets = A₀*	$135,000	Last year's accruals	$20,000
Last year's profit margin = PM	20.0%	Target payout ratio	25.0%

Select the correct answer.

a. - $16,060

b. - $16,040

c. - $16,020

d. - $16,000

e. - $15,980

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