Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Chapter 12, Problem 8P
Stevens Textile Corporation’s 2019 financial statements are shown here. Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to grow by 15% in the next year but will finance the growth with a line of credit, not notes payable or long-term bonds. Use the
- a. What is the projected value for earnings before interest and taxes?
- b. What is the projected value for pre-tax earnings?
- c. What is the projected net income?
- d. What is the projected addition to retained earnings?
- e. What is the projected value of total current assets?
- f. What is the projected value of total assets?
- g. What is the projected sum of accounts payable, accruals, and notes payable?
- h. What is the forecasted line of credit?
Balance Sheet as of December 31, 2019 (Thousands of Dollars)
Income Statement for December 31, 2019 (Thousands of Dollars)
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Stevens Textile Corporation’s 2019 financial statements are shown here. Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to grow by 15% in the next year but will finance the growth with a line of credit, not notes payable or long-term bonds. Use the forecasted financial statement methodto forecast a balance sheet and income statement for December 31, 2020. The interest rate on all debt is 10%, and cash earns no interest income. The line of credit is added at the end of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determinethe addition to retained earnings. Assume that the company was operating at full capacity in 2019, that it cannot sell off any of its fixed assets, and that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales.a. What is the…
Aneles Inc.’s Balance Sheet as of December 31, 2020 is as follows:
In 2020, the company reported sales of 3,000,000, Net Income of 60,000, and dividends of 10,000. Sales are projected to increase by 10% next year. Both Profit Margin and the Dividend Pay-Out Ratio will remain the same. Operations are at full capacity. Assume external fund will be raised through issuances of Long-Term Obligations or Bonds.
A. How much Long-term Debt will the company have to issue next year?
B. If the operations are not in full capacity, what will be AFN?
As an alternative to the bank loan, management is considering issuing $32 million in six-year bonds. The bonds pay 3% interest semi-annually and would be issued at 90.61 to yield 8%. Determine the company's long-term debt to equity and debt as a percentage of total capitalization ratios if it decides to borrow money using bonds and purchase the equipment.The statement of financial position as of December 31, 2024, for Cullumber Corporation as follows.Current Assets: 61000000Non-current Assets: 107000000Total Assets: 168000000Current Liabilities: 26000000Long-term Liabilities: 45000000Shareholder's Equity: 97000000Total liabilities and Shareholder's Equity: 168000000
Chapter 12 Solutions
Financial Management: Theory & Practice
Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - What is meant by the term “self-supporting growth...Ch. 12 - Suppose a firm makes the following policy changes...Ch. 12 - Broussard Skateboard’s sales are expected to...Ch. 12 - Berman & Jaccor Corporation’s current sales and...Ch. 12 - Smiley Corporations current sales and partial...Ch. 12 - Maggie’s Muffins Bakery generated $5 million in...Ch. 12 - At year-end 2019, Wallace Landscapings total...
Ch. 12 - The Booth Company’s sales are forecasted to double...Ch. 12 - Upton Computers makes bulk purchases of small...Ch. 12 - Stevens Textile Corporations 2019 financial...Ch. 12 - Hatfield Medical Supplys stock price had been...Ch. 12 - Use the AFN equation to estimate Hatfield’s...Ch. 12 - Prob. 3MC
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