The Booth Company’s sales are forecasted to increase from $1,000 in 2006 to $2,000 in 2007. Here is the December 31, 2006, balance sheet: Booth’s fixed assets were used to only 50 percent of capacity during 2006, but its current assets were at their proper levels. All assets except fixed assets increase at the same rate as sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. Booth’s after-tax profit margin is forecasted to be 5 percent, and its payout ratio will be 60 percent. What is Booth’s additional funds needed (AFN) for the coming year?
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The Booth Company’s sales are forecasted to increase from $1,000 in 2006 to $2,000 in 2007. Here is the December 31, 2006, balance sheet:
Booth’s fixed assets were used to only 50 percent of capacity during 2006, but its current assets were at their proper levels. All assets except fixed assets increase at the same rate as sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. Booth’s after-tax profit margin is forecasted to be 5 percent, and its payout ratio will be 60 percent. What is Booth’s additional funds needed (AFN) for the coming year?
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- Western Gas & Electric Co. (WG&E) had sales of $1,550,000 last year on fixed assets of $270,000. Given that WG&E’s fixed assets were being used at only 94% of capacity, then the firm’s fixed asset turnover ratio was? How much sales could Western Gas & Electric Co. (WG&E) have supported with its current level of fixed assets? When you consider that WG&E’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio? Suppose WG&E is forecasting sales growth of 22% for this year. If existing and new fixed assets are used at 100% capacity, the firm’s expected fixed assets turnover ratio for this year is?The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $270,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $70 and variable costs at 70% of revenue. The company’s policy is to pay out one-half of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 1,800 Fixed costs 70 Variable costs (70% of revenue) 1,260 Depreciation 216 Interest (6% of beginning-of-year debt) 18 Taxable income 236 Taxes (at 35%) 83 Net income $ 153 Dividends $ 77 Addition to retained…The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $270,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $70 and variable costs at 70% of revenue. The company’s policy is to pay out one-half of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 1,800 Fixed costs 70 Variable costs (70% of revenue) 1,260 Depreciation 216 Interest (6% of beginning-of-year debt) 18 Taxable income 236 Taxes (at 35%) 83 Net income $ 153 Dividends $ 77 Addition to retained…
- The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $200,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $90 and variable costs at 70% of revenue. The company’s policy is to pay out one-half of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 1,800 Fixed costs 90 Variable costs (70% of revenue) 1,260 Depreciation 160 Interest (6% of beginning-of-year debt) 18 Taxable income 272 Taxes (at 35%) 95 Net income $ 177 Dividends $ 89 Addition to retained…The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $240,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $64 and variable costs at 80% of revenue. The company’s policy is to pay out two-thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 1,800 Fixed costs 64 Variable costs (80% of revenue) 1,440 Depreciation 96 Interest (8% of beginning-of-year debt) 24 Taxable income 176 Taxes (at 40%) 70 Net income $ 106 Dividends $ 71 Addition to…The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $240,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $64 and variable costs at 80% of revenue. The company’s policy is to pay out two-thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 1,800 Fixed costs 64 Variable costs (80% of revenue) 1,440 Depreciation 96 Interest (8% of beginning-of-year debt) 24 Taxable income 176 Taxes (at 40%) 70 Net income $ 106 Dividends $ 71 Addition to…
- The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $350,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $86 and variable costs at 70% of revenue. The company’s policy is to pay out one-half of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 2,160 Fixed costs 86 Variable costs (70% of revenue) 1,512 Depreciation 280 Interest (6% of beginning-of-year debt) 18 Taxable income 264 Taxes (at 35%) 92 Net income $ 172 Dividends $ 86 Addition to retained…The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $200,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $60 and variable costs at 80% of revenue. The company's policy is to pay out two- thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019 (Figures in $ thousands) Revenue $1,800 Fixed costs Variable costs (80% of revenue) Depreciation Interest (8% of beginning-of-year debt) Taxable income Taxes (at 40%) 60 1,440 80 24 196 78 Net income 118 Dividends Addition to retained earnings $ 79 $ 39 BALANCE SHEET, YEAR-END (Figures in $ thousands) 2019 Assets Net working capital Fixed assets…The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $400,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $96 and variable costs at 80% of revenue. The company’s policy is to pay out two-thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 2,760 Fixed costs 96 Variable costs (80% of revenue) 2,208 Depreciation 160 Interest (8% of beginning-of-year debt) 40 Taxable income 256 Taxes (at 40%) 102 Net income $ 154 Dividends $ 103 Addition to…
- Seaweed MFG, INC. is currently operating at only 78 percent of fixed asset capacity. Fixed assets are $401,800. Current sales are $ 490,000 and projected to grow to $ 747,564. How much in new fixed assets are required to support this growth in sales? Assume the company maintains its current operating capacity.Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $9.4 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments. Assets Current $2,294,000 Current liabilities Long-term debt Equity assets Fixed assets 5,402,000 Liabilities and Equity Total assets $7,696,000 Total liabilities and equity $2,368,000 1,700,000 3,628,000 $7,696,000 If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.) Additional funds neededWater and Power Co. (W&P) had sales of $1,790,000 last year on fixed assets of $345,000. Given that W&P’s fixed assets were being used at only 95% of capacity, then the firm’s fixed asset turnover ratio was x. (Note: Round your answer to two decimal places.) How much sales could Water and Power Co. (W&P) have supported with its current level of fixed assets? (Note: Round your answer to the nearest whole number.) $1,695,790 $1,978,422 $1,884,211 $1,790,000 When you consider that W&P’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio? (Note: Round your answer to two decimal places.) 19.23% 17.39% 18.31% 16.48% Suppose W&P is forecasting sales growth of 22% for this year. If existing and new fixed assets are used at 100% capacity, the firm’s expected fixed-assets turnover ratio for this year is _______________ .(Note: Round your answer to…