The Retail Company currently has assets of P3,000,000 and accounts payable of P200,000. The firm's sales last year were P10,000,000 with a net profit margin of 1%. If the firm anticipates next year's sales to grow by 8% over that of last year and the firm pays out 25% of its net income in dividends, is the estimated external funds requirement for Retail would be P

The Retail Company currently has assets of P3,000,000 and accounts payable of P200,000. The firm's sales last year were P10,000,000 with a net profit margin of 1%. If the firm anticipates next year's sales to grow by 8% over that of last year and the firm pays out 25% of its net income in dividends, is the estimated external funds requirement for Retail would be P

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
Milton Gaming Company currently has assets of P3,000,000 and accounts payable of P200,000. The firm's sales last year were P10,000,000. If the firm anticipates next year's sales to grow by 8% over that of last year and the firm pays out 25% of its net income in dividends, then what net profit margin is required in order to have the estimated external funds required be equal to zero? 2.50% 25.00% O 27.00% O 2.77%
The white oak company's annual sales are 219 million van average of 9 days elapses between when a customer malls its payment and when the funds become usable by the firm. a. If the company could speed up the collection of funds by 2 days, what would be the increase in the firm’s average cash balance? b. Assuming that these additional funds can be invested in the marketable securities that yield 7 percent per year, determine the increase in white Oak’s annual (pretax) earnings
The following information is available for Multicomm Limited : Asset/Sales is 0.9, change in sales is Rs.50 million, Liability/Sales is 0.60, Net Profit Margin is 7 percent, S1=Rs.250 million and retention ratio = 0.8. How much fund will the firm be able to generate internally for the forthcoming year a. 14 million b. 0.8 million c. 1.5 million d. 1 million
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Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $10.5 million in total assets and $1 million in current liabilities. The firm currently pays out 75 percent of its net income to shareholders. Assume that all assets and current liabilities are expected to grow with sales. If Goldilochs does not want to rely on any external sources of funds, what is the most sales can grow (in chars)? $187,900 $299,900 $328,800 $364,100
Company is planning its operations for next year, and as its CFO, you will need to forecast the company’s additional funds needed (AFN) based on the following data. Dollars are in millions. Last year’s sales = $364 Last year’s accounts payable = $58Sales growth rate = 30% Last year’s notes payable = $50Last year’s total assets = $548 Last year’s accruals = $30Last year’s profit margin = 5.32% Target payout ratio = 60% Your company is operating at full capacity. Based on the AFN formula and the Percentage of Sales method, what is the AFN for the coming year? Round your answer to two decimal places of dollar, but ignore dollar and millions, e.g., xxx.xx. (Hint: Use the AFN General Formula in Financial Forecasting.) Answer:
(a) The firm earns 5% on current assets and 15% on fixed assets. The firm's current liabilities cost 7% to maintain and the average annual cost of long-term funds is 20 %. Flum Packages, Inc. Current assets RM10,000 Current Liabilities RM5,000 Fixed assets RM20,000 Long-term debt RM12,000 Equity RM13,000 Total RM30,000 Total RM30,000 (i) Calculate the firm's initial net working capital. (ii) Calculate the firm's initial ratio of current assets to total assets. b. Critically evaluate THREE (3) advantages of commercial paper that usually used by the largest and most credit-worthy companies.
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Compute the additional funds needed. JHOPE "I am your hope" Company has 10% net profit margin on sales in previous years and expects to maintain the same next year. The Business is expected to increase its sales level from P1,000,000 to P1 255 000. The percentages of current sales and current liabilities that have direct relationship with sales are 60% and 35%, respectively. Out of the total earnings at are expected to be realized next year, 25% will be retumed to the shareholders in the form of dividends. Compute the following: 5. Projected increase in current assets 6. Spontaneous increase in current liabilities 7. Increase in retained earings 8. Additional fund needed.
BHS Incorporated determines that sales will rise from $400,000 to $550,000 next year. Spontaneous assets are 60% of sales, and spontaneous liabilities are 30% of sales. BHS has an 8% profit margin and a 40% dividend payout ratio. What is the level of required new funds?
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