ny --Additional Financing Needed Assume sales grow 40% in 2021 over 2020; the average collection period increases by 9 days in 2021 compared to 2020 (360 days in the year), inventory turnover based on sales decreases by 1 in 2021 compared to 2020, PACO pays a constant percentage of Net Income as a dividend, and 2020 net fixed assets are operating at 90% capacity. Estimate the following ratios for PACO after the first pass for 2021 assuming any additional financing needed is obtained 25% with notes payables and 75% long-term debt. Assume in 2020; short-term interest rates were 3% points less than long-term rates, i. e if short-term rates are 6%, then long-term rates are 9%. Assume further that rates are expected to remain at those levels in 2021. Finally, any remaining AFN after 1st pass is included in the total debt for ratios.
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Paco Company --Additional Financing Needed
Assume sales grow 40% in 2021 over 2020; the average collection period increases by 9 days in 2021 compared to 2020 (360 days in the year), inventory turnover based on sales decreases by 1 in 2021 compared to 2020, PACO pays a constant percentage of Net Income as a dividend, and 2020 net fixed assets are operating at 90% capacity.
Estimate the following ratios for PACO after the first pass for 2021 assuming any additional financing needed is obtained 25% with notes payables and 75% long-term debt. Assume in 2020; short-term interest rates were 3% points less than long-term rates, i. e if short-term rates are 6%, then long-term rates are 9%. Assume further that rates are expected to remain at those levels in 2021. Finally, any remaining AFN after 1st pass is included in the total debt for ratios.
Times Interest Earned Ratio?
Total Debt Ratio?
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