Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 4, Problem 28P
The Manning Company has financial statements as shown next, which are representative of the company’s historical average.
The firm is expecting a 35 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds.
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The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm
is expecting a 30 percent increase in sales next year, and management is concerned about the company's need for external funds.
The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset
utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Sales
Expenses
Earnings before interest and taxes
Interest
Earnings before taxes
Taxes
Earnings after taxes
Dividends
Current assets
Income Statement
Cash
Accounts receivable
Inventory
Fixed assets
Total assets
Assets
The firm
$ 250,000
184,800
$ 65,200
8,600
$ 56,600
16,600
$ 40,000
$ 16,000
Balance Sheet (in $ millions)
$ 221,000
Liabilities and Stockholders' Equity
$ 4,000 Accounts payable
Accrued wages
53,000
68,000
Accrued taxes
$ 125,000
96,000
Current liabilities
Notes payable
Long-term debt…
The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm
is expecting a 30 percent increase in sales next year, and management is concerned about the company's need for external funds.
The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset
utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Sales
Expenses
Earnings before interest and taxes
Interest
Earnings before taxes
Taxes
Earnings after taxes
Dividends
Cash
Accounts receivable
Inventory
Current assets
Fixed assets
Income Statement
Total assets
Assets
$ 280,000
222,800
$ 57,200
7,800
$ 49,400
15,800
$ 33,600
$ 6,720
Balance Sheet (in $ millions)
Liabilities and Stockholders' Equity
$ 5,000 Accounts payable
Accrued wages
86,000
77,000
Accrued taxes
$ 168,000
88,000
Current liabilities
Notes payable
Long-term debt
Common stock
Retained…
The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm
is expecting a 30 percent increase in sales next year, and management is concerned about the company's need for external funds.
The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset
utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Income Statement
Sales
$220,000
158,000
$ 62,000
9,400
$ 52,600
17,400
$ 35,200
Expenses
Earnings before interest and taxes
Interest
Earnings before taxes
Тахes
Earnings after taxes
Dividends
$ 8,800
Balance Sheet
Assets
Liabilities and Stockholders' Equity
$ 5,000
61,000 Accrued wages
77,000 Accrued taxes
Cash
$
Accounts payable
$ 25,700
Accounts receivable
2,400
4,900
$ 33,000
9,400
Inventory
$143,000
89,000 Notes payable
Current assets
Current liabilities
Fixed assets
Long-term debt
Common stock…
Chapter 4 Solutions
Foundations of Financial Management
Ch. 4 - What are the basic benefits and purposes of...Ch. 4 - Explain how the collections and purchases...Ch. 4 - With inflation, what are the implications of using...Ch. 4 - Explain the relationship between inventory...Ch. 4 - Prob. 5DQCh. 4 - Discuss the advantage and disadvantage of level...Ch. 4 - What conditions would help make a percent-of-sales...Ch. 4 - Prob. 1PCh. 4 - Philip Morris expects the sales for his clothing...Ch. 4 - Galehouse Gas Stations Inc. expects sales to...
Ch. 4 - The Alliance Corp. expects to sell the following...Ch. 4 - Prob. 5PCh. 4 - Cyber Security Systems had sales of 3,500 units at...Ch. 4 - Dodge Ball Bearings had sales of 15,000 units at...Ch. 4 - Sales for Ross Pro’s Sports Equipment are expected...Ch. 4 - Vitale Hair Spray had sales of 13,000 units in...Ch. 4 - Delsing Plumbing Company has beginning inventory...Ch. 4 - On December 31 of last year, Wolfson Corporation...Ch. 4 - At the end of January, Higgins Data Systems had an...Ch. 4 - At the end of January, Mineral Labs had an...Ch. 4 - Convex Mechanical Supplies produces a product with...Ch. 4 - The Bradley Corporation produces a product with...Ch. 4 - Sprint Shoes Inc. had a beginning inventory of...Ch. 4 - J. Lo’s Clothiers has forecast credit sales for...Ch. 4 - Simpson Glove Company has made the following sales...Ch. 4 - Watt’s Lighting Stores made the following sales...Ch. 4 - Ultravision Inc. anticipates sales of $290,000...Ch. 4 - The Denver Corporation has forecast the following...Ch. 4 - Wright Lighting Fixtures forecasts its sales in...Ch. 4 - The Volt Battery Company has forecast its sales in...Ch. 4 - Graham Potato Company has projected sales of...Ch. 4 - Harry’s Carryout Stores has eight locations. The...Ch. 4 - Archer Electronics Company’s actual sales and...Ch. 4 - Prob. 27PCh. 4 - The Manning Company has financial statements as...Ch. 4 - Conn Man’s Shops, a national clothing chain, had...
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