Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount fter taxes. The firm is currently in the process of projecting its financing needs and has made the following ssumptions (projections): 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends. 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long- erm debt outstanding. Vhat are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the oming vear?
Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount fter taxes. The firm is currently in the process of projecting its financing needs and has made the following ssumptions (projections): 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends. 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long- erm debt outstanding. Vhat are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the oming vear?
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 9P
Related questions
Question
Transcribed Image Text:Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount
after taxes. The firm is currently in the process of projecting its financing needs and has made the following
assumptions (projections):
1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million.
2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends.
3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long-
term debt outstanding.
What are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the
coming year?
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!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
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.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College