Bundle: Financial Management: Theory And Practice, Loose-leaf Version, 15th + Mindtapv2.0 Finance, 1 Term (6 Months) Printed Access Card
15th Edition
ISBN: 9780357261736
Author: Eugene F. Brigham, Michael C. Ehrhardt
Publisher: Cengage Learning
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Chapter 12, Problem 4P
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To compute: The self-supporting growth rate and the amount of sales can increase.
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Paladin Furnishings generated $4 million in sales during 2016, and its year-end total assets were $3.2 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.80 for every $1.00 increase in sales. Paladin's profit margin is 5%, and its retention ratio is 40%. How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent.
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James Furnishings generated $2 million in sales during 2016, and its year-end total assets were $1.5 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.75 for every $1.00 increase in sales. James' profit margin is 3%, and its retention ratio is 35%.
How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent.
Maggie's Muffins, Inc., generated $2,000,000 in sales during 2016, and its year-end total assets were $1,600,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2017, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 3%, and its payout ratio will be 60%. How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate? Do not round intermediate steps. Round your answers to the nearest whole.
Give typing answer with explanation and conclusion
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- Paladin Furnishings generated $4 million in sales during 2018, andits year-end total assets were $3.2 million. Also, at year-end 2018, current liabilities were$500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and$100,000 of accrued liabilities. Looking ahead to 2019, the company estimates that its assetsmust increase by $0.80 for every $1.00 increase in sales. Paladin’s profit margin is 3%, andits retention ratio is 50%. How large of a sales increase can the company achieve withouthaving to raise funds externally?arrow_forwardMaggie's Muffins Bakery generated $2 million in sales during 2021, and its year-end operating assets were $1.7 million. Also, at year-end 2021, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2022, the company estimates that its operating assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 5%, and its payout ratio will be 60%. How large a sales increase can the company achieve without having to raise funds externally-that is, what is its self-supporting growth rate? Do not round intermediate calculations. Enter your answer for sales increase in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round the monetary value to the nearest dollar and percentage value to one decimal place. Sales can increase by $ 222222 that is by 11.11 %.arrow_forwardMaggie's Muffins Bakery generated $4 million in sales during 2019, and its year-end total assets were $2.8 million. Also, at year-end 2019, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2020, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 3%, and its payout ratio will be 75%. How large a sales increase can the company achieve without having to raise funds externally—that is, what is its self-supporting growth rate? Do not round intermediate calculations. Enter your answer for sales increase in dollars. For example, an answer of $2 million should be entered as 2,000,000.Round the monetary value to the nearest dollar and percentage value to one decimal place. Sales can increase by $ that is by 1.5 %.arrow_forward
- Maggie's Muffins Bakery generated $4 million in sales during 2019, and its year-end total assets were $2.2 million. Also, at year-end 2019, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2020, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 6%, and its payout ratio will be 60%. How large a sales increase can the company achieve without having to raise funds externally-that is, what is its self- supporting growth rate? Do not round intermediate calculations. Enter your answer for sales increase in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round the monetary value to the nearest dollar and percentage value to one decimal place. Sales can increase by $ that is by %.arrow_forwardMaggie’s Muffins Bakery generated $5 million in sales during 2019, and its year-end total assets were $2.5 million. Also, at year-end 2019, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2020, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 7%, and its payout ratio will be 80%. How large a sales increase can the company achieve without having to raise funds externally—that is, what is its self-supporting growth rate?arrow_forwardA Muffins Bakery generated $2 million in sales during 2019, and its year-end total assets were $1.1 million. Also, at year-end 2019, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2020, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 6%, and its payout ratio will be 80%. How large a sales increase can the company achieve without having to raise funds externally—that is, what is its self-supporting growth rate? Sales can increase by $ ___?__, that is by _____?___%arrow_forward
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- At year-end 2020, RWD Inc.’s total assets were $1.2 million and its accounts payable were $375,000. Sales, which in 2020 were $2.5 million, are expected to increase by 25% in 2021. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. RWD typically uses no current liabilities other than accounts payable. Its profit margin on sales is 6%, and 40% of earnings will be paid out as dividends. Determine the amount of AFN for year 2021. Calculate earnings per share (EPS) for CVN and TPO for year 2020 and each of the next 6 years if CVNacquires TPO at a ratio of exchange of 1.3. Describe the initial effect and long run effect on EPS of CVN and TPO. Does merger look beneficial forCVN and TPO? Why or why not?arrow_forwardAt year-end 2018, total assets for Arrington Inc. were$1.8 million and accounts payable were $450,000. Sales, which in 2018 were $3.0 million,are expected to increase by 25% in 2019. Total assets and accounts payable are proportionalto sales, and that relationship will be maintained; that is, they will grow at the same rate assales. Arrington typically uses no current liabilities other than accounts payable. Commonstock amounted to $500,000 in 2018, and retained earnings were $475,000. Arrington plansto sell new common stock in the amount of $130,000. The firm’s profit margin on sales is5%; 35% of earnings will be retained.a. What were Arrington’s total liabilities in 2018?b. How much new long-term debt financing will be needed in 2019?(Hint: AFN - New stock = New long-term debt.)arrow_forwardAt year-end 2021, total assets for Arrington Inc. were $1.7 million and accounts payable were $350,000. Sales, which in 2021 were $2.60 million, are expected to increase by 25% in 2022. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Arrington typically uses no current liabilities other than accounts payable. Common stock amounted to $405,000 in 2021, and retained earnings were $285,000. Arrington plans to sell new common stock in the amount of $160,000. The firm's profit margin on sales is 5%; 50% of earnings will be retained. a. What were Arrington's total liabilities in 2021? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest cent. b. How much new long-term debt financing will be needed in 2022? (Hint: AFN - New stock = New long-term debt.) Write out your answer completely. For example, 25 million should be…arrow_forward
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