Foundations of Finance (9th Edition) (Pearson Series in Finance)
Foundations of Finance (9th Edition) (Pearson Series in Finance)
9th Edition
ISBN: 9780134083285
Author: Arthur J. Keown, John D. Martin, J. William Petty
Publisher: PEARSON
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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. 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million.
  2. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends.
  3. 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?

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(Forecasting financing needs) Beason Manufacturing forecasts its sales next year to be $5.4 million and expects to earn 4.9 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): • Current assets are equal to 19.8 percent of sales, and fixed assets remain at their current level of $0.8 million. • Common equity is currently $0.78 million, and the firm pays out half of its after-tax earnings in dividends. The firm has short-term payables and trade credit that normally equal 11.8 percent of sales, and it has no long-term debt outstanding. What are Beason's financing needs for the coming year? Beason's expected net income for next year is $ (Round to the nearest dollar.)
(Forecasting financing needs) Beason Manufacturing forecasts its sales next year to be $5.6 million and expects to earn 4.3 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): • Current assets are equal to 19.3 percent of sales, and fixed assets remain at their current level of $1.1 million. • Common equity is currently $0.75 million, and the firm pays out half of its after-tax earnings in dividends. • The firm has short-term payables and trade credit that normally equal 12.1 percent of sales, and it has no long-term debt outstanding. What are Beason's financing needs for the coming year? Beason's expected net income for next year is $ 240,800 (Round to the nearest dollar.) Beason's expected common equity balance for next year is $ 870400. (Round to the nearest dollar.) Estimate Beason's financing needs by completing the pro forma balance sheet below: (Round to the nearest…
(Financial forecasting-discretionary financing needs) Sambonoza Enterprises projects its sales next year to be $7 million and expects to eam 7 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 28 percent of sales, and fixed assets will remain at their current level of $1 million. 2. Common equity is currently $0.90 million, and the firm pays out half of its after-tax eamings in dividends 3. The firm has short-term payables and trade credit that normally equal 14 percent of sales, and it has no long-term debt outstanding. What are Sambonoza's financing requirements (ie., total assets) and discretionary financing needs (DFN) for the coming year? What are Sambonoza's financing requirements or total assets for the coming year? million. (Round to two decimal places.)
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