Assume the company uses the AFN formula and all additional funds needed (AFN) will come from issuing new long-term debt. Given its forecast, how much long-term debt will the company have to issue in 2023?Lux Co. has the following balance sheet as of December 31, 2022 Current assets P 600,000 Accounts payable400,000 Accrued liabilitiesNotes payableLong-term debtTotal common equityP 100,000100,000100,000300,000400,000P1.000,000 Total liabilities & equity P1.000.000Fixed assetsTotal assetsIn 2022, the company reported sales of P5 million, net income of P100,000, anddividends of P50,000. The company anticipates its sales will increase 25 percent in2023 and its dividend payout will remain at 50 percent. Assume the company is at fullcapacity, so its assets and spontaneous liabilities will increase proportionately with anincrease in sales.

Additional funds needed(AFN) is the concept used by organizations to determine the amount of funding…

Answered: Assume the company uses the AFN formula…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 103.3C

See similar textbooks

Related questions

Question

Assume the company uses the AFN formula and all additional funds needed (AFN) will come from issuing new long-term debt. Given its forecast, how much long-term debt will the company have to issue in 2023?

Lux Co. has the following balance sheet as of December 31, 2022

Current assets P 600,000 Accounts payable
400,000 Accrued liabilities
Notes payable
Long-term debt
Total common equity
P 100,000
100,000
100,000
300,000
400,000
P1.000,000 Total liabilities & equity P1.000.000
Fixed assets
Total assets
In 2022, the company reported sales of P5 million, net income of P100,000, and
dividends of P50,000. The company anticipates its sales will increase 25 percent in
2023 and its dividend payout will remain at 50 percent. Assume the company is at full
capacity, so its assets and spontaneous liabilities will increase proportionately with an
increase in sales.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions