EBK 3N3-EBK: FINANCIAL ANALYSIS WITH MI
8th Edition
ISBN: 9780176914943
Author: Mayes
Publisher: VST
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You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, & Worthington (HHW), which is planning its operation for the coming year. The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 55%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year's sales = S0
$300.0
Last year's accounts payable
$50.0
Sales growth rate = g
40%
Last year's notes payable
$15.0
Last year's total assets = A0*
$500
Last year's accruals
$20.0
Last year's profit margin = PM
20.0%
Initial payout ratio
10.0%
Select the correct answer.
a. $34.4
b. $42.9
c. $37.8
d. $41.2…
You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, & Worthington (HHW), which is planning its operation for the coming year. The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 70%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year's sales = S0
$300.0
Last year's accounts payable
$50.0
Sales growth rate = g
40%
Last year's notes payable
$15.0
Last year's total assets = A0*
$500
Last year's accruals
$20.0
Last year's profit margin = PM
20.0%
Initial payout ratio
10.0%
You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, &
Worthington (HHW), which is planning its operation for the coming year. The firm is operating at full
capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the
impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the
firm's investment bankers have recommended. Based on the AFN equation, by how much would the
AFN for the coming year change if HHW increased the payout from 10% to the new and higher
level? All dollars are in millions.
Last year's sales = So
Sales growth rate = g
$300.0
40%
Last year's total assets = Ao $500.0
Last year's profit margin = PM 20.0%
Last year's accounts
payable
Last year's notes payable $15.0
Last year's accruals
$50.0
Initial payout ratio
$20.0
10.0%
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