(Please answer the last two questions thank you!) 1. Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2016 to $9.2 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. 2. Refer to question 1, what would be the additional funds needed if the company's year-end 2016 assets had been $7 million? Assume that all other numbers, including sales, are the same as in question 1 and that the company is operating at full capacity. Why is this AFN different from the one you found in question 1? Is the company's "capital intensity" ratio the same or different? 3. Refer to question 1, return to the assumption that the company had $5 million in assets at the end of 2016, but now assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Why is this AFN different from the one you found in question 1?
(Please answer the last two questions thank you!)
1. Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2016 to $9.2 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%. Use the AFN equation to
2. Refer to question 1, what would be the additional funds needed if the company's year-end 2016 assets had been $7 million? Assume that all other numbers, including sales, are the same as in question 1 and that the company is operating at full capacity. Why is this AFN different from the one you found in question 1? Is the company's "capital intensity" ratio the same or different?
3. Refer to question 1, return to the assumption that the company had $5 million in assets at the end of 2016, but now assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Why is this AFN different from the one you found in question 1?
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