Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 14, Problem 3SP
(Financial forecasting—discretionary financing needs) 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 assests) and discretionary financing needs (DFN) for the coming year?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Answer should be match in options. Many experts are giving incorrect answer they are using AI /Chatgpt that is generating wrong answer.
i will give unhelpful if answer will not match in option.
dont use AI also
Toodles Inc. had sales
of $1,840,000.
administrative and selling expenses, and depreciation expenses were
Cost of goods sold,
$1,180,000, $185,000 and $365,000 respectively. In addition, the
company had an interest expense of $280,000 and a tax rate of 35
percent. (Ignore any tax loss carry-back or carry-forward provisions.)
Arrange the financial information for Toodles Inc. in
statement and compute its OCF?
an income
Footfall Manufacturing Ltd. reports
information at the end of the current year:
Net Sales
$100,000
Debtor's turnover ratio (based on 2
net sales)
Inventory turnover ratio
1.25
Fixed assets turnover ratio
0.8
Debt to assets ratio
0.6
Net profit margin
5%
Gross profit margin
25%
Return on investment
2%
the
following financial
Use the given information to fill out the templates for income
statement and balance sheet given below:
Income Statement of Footfall Manufacturing Ltd. for the year ending
December 31, 20XX
(in $)
Sales
100,000
Cost of goods
sold
Gross profit
Other expenses
Earnings before
Lax
Tax @50%
Earnings
tax
after
Chapter 14 Solutions
Foundations Of Finance
Ch. 14 - Prob. 1RQCh. 14 - Discuss the shortcomings of the percent of sales...Ch. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 1SPCh. 14 - Prob. 2SPCh. 14 - (Financial forecastingdiscretionary financing...Ch. 14 - (Financial forecastingpercent of sales) Next years...Ch. 14 - Prob. 5SPCh. 14 - (Percent of sales forecasting) Which of the...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- TASK DESCRIPTION This assignment is comprised of two discrete tasks that each align with one of the learning outcomes described above. One is an informal report based on a five-year evaluation of the financial management and performance of a London Stock Exchange (LSE) FTSE 100 listed company. This report relates to learning outcome one. The second task, covering learning outcome two, is an essay on a particular aspect of financial-decision making and the main issues and theoretical frameworks related to the topic. Task one (Informal business report) Students are required to choose a public listed company from a given list of familiar United Kingdom (UK) firms whose shares are traded on the London Stock Exchange's FTSE 100 index, download its most recent annual report(s) covering financial statements for the past five years, and from the data presented produce an informal report of approximately 3,000 words which includes a critical overall analysis of its financial performance over…arrow_forwardWrite as like research paper: abstrac,litut review,model.current problem questionire,table,graph, charts, image, analysis, result,conclusion, referencce15-20 1. Provide literature as research paper" liturature review" content as journal 2. article,textbooks.current newspaper article.organizational doccument and website **citation as liturature citation reference 15-20 in liturature review content paragraph. 2. Show latest problem of current knowledge ang give a **model immage, and display show awareness of that problem and questionire. 3. Current that research methodology.show graph.table.chrts.assesment task 4. Design and Result,5. Conclution, 6. Referance 15-20 TASK DESCRIPTION Children educatio Spouse's willingn allowanc travel Spouseoverseas job assistanc Host country housing assistanc Income tax equalisati on policy Overseas health care plan Length of the foreign assignme dareer and repatriati Cross- Personali cultural compete Prior ncies internati Receptivity to Internation al…arrow_forwardWrite in memo format a response to your Manager, based on the information presented below for the Duncan Company and also based on your additional research. Your Manager has advised you to make any assumptions where necessary. Duncan Company is a large manufacturer and distributor of cake supplies. It is based in United Kingdon (Headquarters) It sends supplies to firms throughout the United States and the Caribbean . It markets its supplies through periodic mass mailings of catalogues to those firms. Its clients can make orders over the phone and Duncan ships the supplies upon demand. The main competition for Duncan’s comes from one U.S. firm and one Canadian firm. Another British firm has a small share of the U.S. market but is at a disadvantage because of its distance. The British firm’s marketing and transportation costs in the U.S. market are relatively high. a) Duncan Company plans to penetrate either the Canadian market or two other Caribbean Countries (Jamaica and Haiti). What…arrow_forward
- Answer of the question in the picturearrow_forwardA sporting goods manufacturer has decided to expand into a related business. Management estimates that to build and staff a facility of the desired size and to attain capacity operations would cost $450 million in present value terms. Alternatively, the company could acquire an existing firm or division with the desired capacity. One such opportunity is a division of another company. The book value of the division’s assets is $250 million and its earnings before interest and tax are presently $50 million. Publicly traded comparable companies are selling in a narrow range around 12 times current earnings. These companies have book value debt-to-asset ratios averaging 40 percent with an average interest rate of 10 percent. a. Using a tax rate of 34 percent, estimate the minimum price the owner of the division should consider for its sale. b. What is the maximum price the acquirer should be willing to pay? c. Does it appear that an acquisition is feasible? Why or why not? d. Would a 25…arrow_forwardLarry Davis borrows $80,000 at 14 percent interest toward the purchase of a home. His mortgage is for 25 years. a. How much will his annual payments be? (Although home payments are usually on a monthly basis, we shall do our analysis on an annual basis for ease of computation. We will get a reasonably accurate answer.) b. How much interest will he pay over the life of the loan? c. How much should be willing to pay to get out of a 14 percent mortgage and into a 10 percent mortgage with 25 years remaining on the mortgage? Assume current interest rates are 10 percent. Carefully consider the time value of money. Disregard taxes.arrow_forward
- You are chairperson of the investment fund for the local closet. You are asked to set up a fund of semiannual payments to be compounded semiannually to accumulate a sum of $250,000 after nine years at a 10 percent annual rate (18 payments). The first payment into the fund is to take place six months from today, and the last payment is to take place at the end of the ninth year. Determine how much the semiannual payment should be. (a) On the day, after the sixth payment is made (the beginning of the fourth year), the interest rate goes up to a 12 percent annual rate, and you can earn a 12 percent annual rate on funds that have been accumulated as well as all future payments into the funds. Interest is to be compounded semiannually on all funds. Determine how much the revised semiannual payments should be after this rate change (there are 12 payments and compounding dates). The next payment will be in the middle of the fourth year.arrow_forwardIf your Uncle borrows $60,000 from the bank at 10 percent interest over the seven-year life of the loan, what equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest? How much of his first payment will be applied to interest? To principal? How much of his second payment will be applied to each?arrow_forwardQ1: You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock NEWER Inc. just paid a dividend of $6.00. The dividend is expected to increase by 60%, 45%, 30% and 15% per year, respectively, in the next four years. Thereafter, the dividend will increase by 4% per year in perpetuity. Calculate NEWER’s expected dividend for t = 1, 2, 3, 4 and 5.The required rate of return for NEWER stock is 14% compounded annually.What is NEWER’s stock price?The second stock is OLDER Inc. OLDER Inc. will pay its first dividend of $10.00 three (3) years from today. The dividend will increase by 30% per year for the following four (4) years after its first dividend payment. Thereafter, the dividend will increase by 3% per year in perpetuity. Calculate OLDER’s expected dividend for t = 1, 2, 3, 4, 5, 6, 7 and 8.The required rate of return for OLDER stock is 16% compounded annually.What is OLDER’s stock price?Now assume that both stocks have a required…arrow_forward
- Q1: Blossom is 30 years old. She plans on retiring in 25 years, at the age of 55. She believes she will live until she is 105. In order to live comfortably, she needs a substantial retirement income. She wants to receive a weekly income of $5,000 during retirement. The payments will be made at the beginning of each week during her retirement. Also, Blossom has pledged to make an annual donation to her favorite charity during her retirement. The payments will be made at the end of each year. There will be a total of 50 annual payments to the charity. The first annual payment will be for $20,000. Blossom wants the annual payments to increase by 3% per year. The payments will end when she dies. In addition, she would like to establish a scholarship at Toronto Metropolitan University. The first payment would be $80,000 and would be made 3 years after she retires. Thereafter, the scholarship payments will be made every year. She wants the payments to continue after her death, therefore…arrow_forwardQ1: Blossom is 30 years old. She plans on retiring in 25 years, at the age of 55. She believes she will live until she is 105. In order to live comfortably, she needs a substantial retirement income. She wants to receive a weekly income of $5,000 during retirement. The payments will be made at the beginning of each week during her retirement. Also, Blossom has pledged to make an annual donation to her favorite charity during her retirement. The payments will be made at the end of each year. There will be a total of 50 annual payments to the charity. The first annual payment will be for $20,000. Blossom wants the annual payments to increase by 3% per year. The payments will end when she dies. In addition, she would like to establish a scholarship at Toronto Metropolitan University. The first payment would be $80,000 and would be made 3 years after she retires. Thereafter, the scholarship payments will be made every year. She wants the payments to continue after her death, therefore…arrow_forwardJerome Moore invests in a stock that will pay dividends of $2.00 at the end of the first year; $2.20 at the end of the second year; and $2.40 at the end of the third year. also, he believes that at the end of the third year he will be able to sell the stock for $33. what is the present value of all future benefits if a discount rate of 11 percent is applied?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Discounted cash flow model; Author: Edspira;https://www.youtube.com/watch?v=7PpWneOBJls;License: Standard YouTube License, CC-BY