National Co. recently reported sales of P100 million, and net income equal to P5 million. The company has P70 million in total assets. Over the next year, the company is forecasting a 25 percent increase in sales. Since the company is at full capacity, its assets must increase in proportion to sales. The company also estimates that if sales increase 20 percent, spontaneous liabilities will increase by P2.1 million. If the company's sales increase, its profit margin will remain at its current level. The company's dividend payout ratio is 45 percent. Based on the AFN formula, how much additional capital must the company raise in order to support the 20 percent increase in sales? *
National Co. recently reported sales of P100 million, and net income equal to P5 million. The company has P70 million in total assets. Over the next year, the company is forecasting a 25 percent increase in sales. Since the company is at full capacity, its assets must increase in proportion to sales. The company also estimates that if sales increase 20 percent, spontaneous liabilities will increase by P2.1 million. If the company's sales increase, its profit margin will remain at its current level. The company's dividend payout ratio is 45 percent. Based on the AFN formula, how much additional capital must the company raise in order to support the 20 percent increase in sales? *
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:National Co. recently reported sales of P100 million, and net income equal to P5 million. The
company has P70 million in total assets. Over the next year, the company is forecasting a 25
percent increase in sales. Since the company is at full capacity, its assets must increase in
proportion to sales. The company also estimates that if sales increase 20 percent,
spontaneous liabilities will increase by P2.1 million. If the company's sales increase, its profit
margin will remain at its current level. The company's dividend payout ratio is 45 percent.
Based on the AFN formula, how much additional capital must the company raise in order to
support the 20 percent increase in sales? * A
Format: 11,111,111
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