CU Tech expects sales next year will be $4.8 million, a 25% increase over current sales. CU has total assets of $2.24 million, and all assets will increase proportionately with sales. CU has $1.49 million in current liabilities

CU Tech expects sales next year will be $4.8 million, a 25% increase over current sales. CU has total assets of $2.24 million, and all assets will increase proportionately with sales. CU has $1.49 million in current liabilities

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter9: Projecting Financial Statements

Section: Chapter Questions

Problem 3EP

See similar textbooks

Related questions

Q: Need for External Financing To increase production capacity by 20%, a $5 million investment is…

A: Data given: Investment = $5000,000 Debt to asset ratio = 40% Dividend payout = 25% Net income = $…

Q: Using AFN formula in financial forecasting approach, given the following accounting information…

A: The liabilities which are referred as the obligations of business entity when immediately changes…

Q: which one is correct please suggest? QUESTION 39 Getrag expects its sales to increase 20% next year…

A: Firm needs funds to start the new projects or expand the existing one. Requirement of the funds…

Q: Berman & Jaccor Corporation's current sales and partial balance sheet are shown below. This…

A: Operating Assets: The operating assets include that cash, inventories, accounts receivables &…

Q: designed to improve things. The new plan calls for a total debt ratio of 60%, which will result in…

A: Given: ROE last year = 5% Debt ratio =60% Charges of interest = 8000 EBIT = 26,000 Expected total…

Q: Expected sales in the forthcoming year is $ 50,00. The firm plans to stick to the following policies…

A: Working capital is the capital which is required by the business for the smooth running of the…

Q: The following situation will be used in questions 3, 4 and 5. A hotel is projected to have $ 55 mi…

A: Solution:- The Estimated Hotel value:- Year Formula 1 2 3 4 5 6 7 - Growth rate (Revenue)…

Q: 11. More on the corporate valuation model Qwerty Logistics Corp. is expected to generate a free cash…

A: The current value of the FCF (free cash flows) of a company after discounting is term as the value…

Q: A market research firm with current sales of $750 does not expect any growth in sales for the next…

A: Current Sales are $750 Growth rate in sales is 0% for next 2 years Tax rate is 34% Straight line…

Q: Company is planning its operations for next year, and as its CFO, you will need to forecast the…

A: Additional funds needed: AFN = (Last year total assets / Last years sales)* Change in sales - (Last…

Q: ICU, an eyeglass manufacturer, has current assets of $800,000 and net fixed assets of $1,400,000.…

A: Frist you need calculate what impact on total assets. increse in fixed…

Q: The Danville Company is considering a $50 million expansion (capital expenditure) program next year.…

A: Financing needed is as under-

Q: Company A carries out its sales with a net maturity of 45 days, and is considering increasing this…

A: To find the answer of the first question, we will first have to find the increase in sales. To find…

Q: The Mitchem Marble Company has a target current ratio of 2.1 but has experienced some difficulties…

A: The current ratio is calculated as ratio of current assets and current liabilities. Any increase in…

Q: 1. Company Z has the following data: • Sales 2015 is 500M • Sales growth rate: 9% in 2016 but will…

A: Note: This post has two distinct questions. Q1 has been answered below.

Q: Your company wants to invest JD 10,000,000 in network, taking into consideration the below table:…

A: EBITDA is the earning earned before considering the interest amount and tax rate.

Q: Western Lumber Company expects to have free cash flow in the coming year of $4.25m and is expected…

A: Here, Expected Free cashflow=$4,250,000 Growth rate = 4% Cost of equity = 10% Pre-tax Cost of debt =…

Q: Nakamichi Bancorp has made an investment in banking software at a cost of $1,655,438. Management…

A: Payback period is the amount of time required to recover the initial investment. It can be…

Q: 3. After studying the Financial Forecast and planning, go through the assumption date given below…

A: Discretionary financing is calculated by subtracting the total liabilities & equity of a company…

Q: (Capital structure analysis) The Karson Transport Company currently has net operating income of…

A: Times Interest Ratio: Times interest earned ratio shows the capacity of a business to pay its…

Q: 2. Clayton Industries is planning its operations for next year. Ronnie Clayton, the CEO, wants you…

A: Additional funds needed is the change in total assets less change in total liabilities. AFN =…

Q: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating…

A: Computation:

Q: Need for External Financing To increase production capacity by 20%, a $3 million investment is…

A: The new debt here needed will be New debt =Total investment needed* debt to assets ratio

Q: (Ignore income taxes in this problem.) Your Company is considering an investment that has the…

A: Payback period: Payback period is the length of time in which an investment reaches its break-even…

Q: The Karson Transport Company currently has net operating income of $506,000 and pays interest…

A: Financial ratios are the measures of comparison between two line items of the financial statements…

Q: A report from the marketing department indicates that a new product will generate the following…

A: Discount rate is 11% To Find: Present Value

Q: The most recent financial statements for Retro Machine, Inc., follow. Sales for 2021 are projected…

A: SOLUTION WORKING NOTE - NEXT YEAR SALES = 751000*1.25 = 938750. CHANGE IN SALES = 938750 - 751000…

Q: 1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported…

A: Given: Revenue = $10 million Cost = $9 million Discount rate = 8%

Q: Sawyer Corporation's 2020 sales were $11 million. Its 2015 sales were $5.5 million. a. At what rate…

A: Sales in 2020 - $11 million Sales in 2015 - $5.5 million Annual average growth rate = Last…

Q: Tallinn Financial forecasts €200,000 in net income next fiscal year and ending total assets for…

A: The question is related to net new financing needed next year. First we will calculate the current…

Q: Atlas Corporation wants to determine the optimal level of current assets that should be kept in the…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Mars Corporation is interested in estimating the expected rate of sales growth sustainability and…

A: It's important for the companies to have a high growth rate to compete with the competitors in the…

Q: as « Question 15 of 50 > Clayton Industries is planning its operations for next year. Ronnie…

A: Formula used: AFN = Projected increase in assets – spontaneous increase in liabilities – Any…

Q: To increase production capacity by 20%, a $3 million investment is needed. The firm wants to…

A: Retained earnings = Net income *(1 – dividend Payout ratio) = 4 * (1 - 0.75) = 4 * .25 =$ 1 million

Q: (gnore income taxes in this problem.) Your Company is considering an investment that has the…

A: Payback is the time taken to recover the initial outlay of investment through cash inflows generated…

Q: The RRR Company has a target current ratio of 1.8. Presently, the current ratio is 2.5 based on…

Q: Quantitative Problem 1: Beasley Industries' sales are expected to increase from $5 million in 2019…

A: Additional funds needed (AFN) seem to be the sum of money that a firm needs to raise from outside…

Q: Q1:- Atlas Corporation wants to determine the optimal level of current assets that should be kept in…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag…

A: The assets and liabilities are presented in the balance sheet of the company whereas, he profit is…

Q: Dozier Corporation is a fast-growing supplier of office products. Analysts project the following FCF…

A: Present value is the present worth of any sum of money to be received in the future at a specified…

Q: A firm needs $200,000 to start and expects Sales $300,000…

A: Return on Owner's Investment = Net Income / Owner's equity Owner's equity in case 1 =$200,000…

Q: 1. Company Z has the following data: • Sales 2015 is 500M • Sales growth rate: 9% in 2016 but will…

A: As per the honor code, we’ll answer only one question at a time, we have answered the first question…

Question

which one is correct please confirm?

QUESTION 35

CU Tech expects sales next year will be $4.8 million, a 25% increase over current sales. CU has total assets of $2.24 million, and all assets will increase proportionately with sales. CU has $1.49 million in current liabilities and a current ratio of 1.60 to 1. What total financing will CU need to support the expected sales increase?

a.
$234,400

b.
No financing needed, surplus of $139,700

c.
$48,800

d.
$187,500

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

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, finance and related others by exploring similar questions and additional content below.

Similar questions

AFN Equation Refer to Problem 9-1. What would be the additional funds needed if the companys year-end 2018 assets had been 7 million? Assume that all other numbers, including sales, are the same as in Problem 9-1 and that the company is operating at full capacity. Why is this AFN different from the one you found in Problem 9-1? Is the companys capital intensity ratio the same or different?
Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors require a 13% rate of return on (WACC = 13%). What is the estimated value of operations if investors expect FCF to grow at a constant annual rate of (1) −5%, (2) 0%, (3) 5%, or (4) 10%?
Relaxing Collection Efforts The Boyd Corporation has annual credit sales of 1.6 million. Current expenses for the collection department are 35,000, bad-debt losses are 1.5%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to 22,000 per year. The change is expected to increase bad-debt losses to 2.5% and to increase the days sales outstanding to 45 days. In addition, sales are expected to increase to 1,625,000 per year. Should the firm relax collection efforts if the opportunity cost of funds is 16%, the variable cost ratio is 75%, and taxes are 40%?
which one is correct please suggest? QUESTION 39 Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag has current assets of $660,000, net fixed assets of $1.5 million, and current liabilities of $462,000. All assets are expected to grow proportionately with sales. If Getrag has a net profit margin of 10%, what additional financing will be needed to support the increase in sales? Getrag does not pay dividends. a. $339,600 b. No financing needed, surplus of $224,400 c. No financing needed, surplus of $524,400 d. $283,200
Which one is correct answer please confirm? QUESTION 39 Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag has current assets of $660,000, net fixed assets of $1.5 million, and current liabilities of $462,000. All assets are expected to grow proportionately with sales. If Getrag has a net profit margin of 10%, what additional financing will be needed to support the increase in sales? Getrag does not pay dividends. a. $339,600 b. No financing needed, surplus of $224,400 c. No financing needed, surplus of $524,400 d. $283,200
which one is correct answer please confirm? Q6: ICU, an eyeglass manufacturer, has current assets of $800,000 and net fixed assets of $1,400,000. The firm expects its sales to climb 25 percent next year from its current level of $3,500,000. ICU's only current liability is accounts payable of $1,200,000. If both current assets and current liabilities will increase proportionately with sales, what additional financing will be needed by ICU next year? Assume ICU has a net profit margin of 6 percent. An increase in net fixed assets of $500,000 will be required. The firm pays out 50 percent of its earnings as dividends. a. $358,750 b. $178,750 c. $268,750 d. $400,000
H6. Java Company is planning its operations for next year, and as its CFO, you will need to forecast the company’s additional funds needed (AFN) based on the following data. Dollars are in millions. Last year’s sales = $415 Last year’s accounts payable = $50 Sales growth rate = 30% Last year’s notes payable = $50 Last year’s total assets = $595 Last year’s accruals = $30 Last year’s profit margin = 5.31% Target payout ratio = 60% Your company is operating at full capacity. Based on the AFN formula and the Percentage of Sales method, what is the AFN for the coming year? Group of answer choices $142.20 $141.36 $143.04 $144.53 $145.38