Intermediate Financial Management (MindTap Course List)
12th Edition
ISBN: 9781285850030
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 9, Problem 2MC
Summary Introduction
Case summary:
Company H is a medical supplies company. Its stock price had been lagging its industry averages. So board of directors has decided to appoint person L is a CEO and asked him to develop the financial planning and strategic plans and
She always compares financial ratios of Company H with industry averages. If any ratio is substandard she discussed immediately with the responsible manager and needs to improve the situations.
To determine: New external capital of Company H in the year 2019 by using AFN equation.
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Students have asked these similar questions
Use the AFN equation to estimate Hatfield’s required new external capital for 2020 if the sales growth rate is 11.1%. Assume that the firm’s 2019 ratios will remain the same in 2020. (Hint: Hatfield was operating at full capacity in 2019.)
Suppose that Maphisa Plc has the following balance sheet and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $8 million next year. If all assets and current liabilities are expected to grow with sales, what additional funds will Maphisa Plc need from external sources to fund the expected growth?
Assets
Liabilities and Equity
Lanigan Logistics needs to evaluate its financial needs for 2024. It is believed
that the relationship between sales and balance sheet items will remain constant
when compared to 2023 figures.
In 2023 LL expects sales of £4 million with net income of £0.5 million and
a 50% dividend payout ratio. Sales for 2024 are forecast at £5 million with
net income constant at £0.5 million. Based on the projected balance sheet
below, estimate the company's external funding requirements for 2024.
Lorenzo Logistics Balance Sheet 2023
Assets
Current Assets
£410,000
Net Fixed Assets
1,150,000
Total
£1,560,000
Liabilities and Equity
Accounts Payable
£450.000
Long Term Debt
350,000
Total Liabilities
£800.000
Common Stock
£100,000
Additional Paid in Capital
210,000
Retained Earnings
450,000
Total Equity
£760,000
Total
£1,560,000
Chapter 9 Solutions
Intermediate Financial Management (MindTap Course List)
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