Oblems Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows:
Oblems Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows:
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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Question
![Self-Test Problems:
1.
Use the percentage of sales forecasting method to compute the additional financing
needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to
increase from a current level of $20 million to a new level of $25 million over the
coming year. LSS expects earnings after taxes to equal $1 million over the next
year. LSS intends to pay a $300,000 dividend next year. The current year balance
sheet for LSS is as follows:
Lambrechts Specialty Shops, Inc.
Balance Sheet as of December 31, 20X3
cash
$1,000,000 Accounts payable
$3,000,000
Accounts receivable
1,500,000 Notes payable
3,000,000
inventories
6,000,000 Long-term debt
2,000,000
Net fixed assets
3,000,000 Stockholders' equity
3,500,00
Total Assets
$11,500,000 Total liabilities and equity
$11,500,000
All assets, except "cash", are expected to vary proportionately with sales. Of total liabilities
and equity, only "accounts payable" is expected to vary proportionately with sales.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1ae274e4-fc23-4a49-bb01-9e38e1ca1a00%2F4cd8a501-4ef6-4bf9-9243-d491ab18f601%2Fyphbg8l_processed.png&w=3840&q=75)
Transcribed Image Text:Self-Test Problems:
1.
Use the percentage of sales forecasting method to compute the additional financing
needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to
increase from a current level of $20 million to a new level of $25 million over the
coming year. LSS expects earnings after taxes to equal $1 million over the next
year. LSS intends to pay a $300,000 dividend next year. The current year balance
sheet for LSS is as follows:
Lambrechts Specialty Shops, Inc.
Balance Sheet as of December 31, 20X3
cash
$1,000,000 Accounts payable
$3,000,000
Accounts receivable
1,500,000 Notes payable
3,000,000
inventories
6,000,000 Long-term debt
2,000,000
Net fixed assets
3,000,000 Stockholders' equity
3,500,00
Total Assets
$11,500,000 Total liabilities and equity
$11,500,000
All assets, except "cash", are expected to vary proportionately with sales. Of total liabilities
and equity, only "accounts payable" is expected to vary proportionately with sales.
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