Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount ter taxes. The firm is currently in the process of projecting its financing needs and has made the following ssumptions (projections): 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of S1 million. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends. 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long- m debt outstanding. /hat are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the
Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount ter taxes. The firm is currently in the process of projecting its financing needs and has made the following ssumptions (projections): 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of S1 million. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends. 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long- m debt outstanding. /hat are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the
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
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Transcribed Image Text:Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount
after taxes. The firm is currently in the process of projecting its financing needs and has made the following
assumptions (projections):
1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million.
2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends.
3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long-
term debt outstanding.
What are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the
coming year?
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