Problem 15-5 Spreadsheet Problem: AFN with Excess Capacity (LG15-4) Suppose that Psy Ops Industries currently has the balance sheet shown below, and that sales for the year just ended were $5.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $8.4 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed $ 2,376,000 Current liabilities 4,200,000 Long-term debt Equity $ 6,576,000 Total liabilities and equity $ 1,836,000 1,700,000 3,040,000 $ 6,576,000 If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will Psy Ops need from external sources to fund the expected growth? Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.
Problem 15-5 Spreadsheet Problem: AFN with Excess Capacity (LG15-4) Suppose that Psy Ops Industries currently has the balance sheet shown below, and that sales for the year just ended were $5.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $8.4 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed $ 2,376,000 Current liabilities 4,200,000 Long-term debt Equity $ 6,576,000 Total liabilities and equity $ 1,836,000 1,700,000 3,040,000 $ 6,576,000 If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will Psy Ops need from external sources to fund the expected growth? Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 26SP
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Transcribed Image Text:Problem 15-5 Spreadsheet Problem: AFN with Excess Capacity (LG15-4)
Suppose that Psy Ops Industries currently has the balance sheet shown below, and that sales for the year just ended were $5.4
million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $8.4 million next year.
Assets
Current assets
Fixed assets
Total assets
Liabilities and Equity
$
Additional funds needed
$ 2,376,000 Current liabilities
4,200,000
Long-term debt
Equity
$ 6,576,000 Total liabilities and equity
1,836,000
1,700,000
3,040,000
$ 6,576,000
If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase
with sales, what amount of additional funds will Psy Ops need from external sources to fund the expected growth?
Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.
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