2. More on the AFN (Additional Funds Needed) equation Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet: Total assets: Accounts payable: Notes payable: Accrued liabilities: Based on the AFN equation, the firm's AFN for the current year is $425,000 $75,000 $25,000 $60,000 A positively signed AFN value represents: OA shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth. 71.2% oint at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales uirements. 62.3% 80.1% urplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. 89.0% Bec excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay of its earnings to shareholders without needing to raise any external capital.(Hint: What can Green Moose increase its dividend payout ratio to before the AFN becomes positive?) out
2. More on the AFN (Additional Funds Needed) equation Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet: Total assets: Accounts payable: Notes payable: Accrued liabilities: Based on the AFN equation, the firm's AFN for the current year is $425,000 $75,000 $25,000 $60,000 A positively signed AFN value represents: OA shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth. 71.2% oint at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales uirements. 62.3% 80.1% urplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. 89.0% Bec excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay of its earnings to shareholders without needing to raise any external capital.(Hint: What can Green Moose increase its dividend payout ratio to before the AFN becomes positive?) out
Chapter9: Projecting Financial Statements
Section: Chapter Questions
Problem 3EP
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Please help with practice problems and the answers are one those numbers in the picture
Transcribed Image Text:2. More on the AFN (Additional Funds Needed) equation
Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to
maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet:
Total assets:
Accounts payable:
Notes payable:
Accrued liabilities:
Based on the AFN equation, the firm's AFN for the current year is
$425,000
$75,000
$25,000
$60,000
A positively signed AFN value represents:
Bec
out
O A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth.
71.2% oint at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales
62.3% uirements.
80.1% urplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends.
89.0%
excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay
of its earnings to shareholders without needing to raise any external capital.(Hint: What can Green Moose increase its dividend
payout ratio to before the AFN becomes positive?)
Transcribed Image Text:2. More on the AFN (Additional Funds Needed) equation
Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to
maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet:
Total assets:
Accounts payable:
Notes payable:
Accrued liabilities:
$425,000
$75,000
$25,000
$60,000
Based on the AFN equation, the firm's AFN for the current year is
A positively signed AFN value represents:
-$120,719
-$88,218
O A shortage of internally generated funds that must be r
O A point at which the funds generated within the firm eq
requirements.
O A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends.
-$92,861
the company to finance the company's forecasted future growth.
hds for funds to finance the firm's future expected sales
-$102,147
Because of its excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay
out
of its earnings to shareholders without needing to raise any external capital. (Hint: What can Green Moose increase its dividend
payout ratio to before the AFN becomes positive?)
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