Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
8th Edition
ISBN: 9781285065137
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Chapter 16, Problem 3P
AFN EQUATION Refer to Problem 16-1 and assume that the company had $3 million in assets at the end of 2014. However, now assume that the company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in Problem 16-1?
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Chapter 16 Solutions
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Ch. 16 - Prob. 1QCh. 16 - Assume that an average firm in the office supply...Ch. 16 - Would you agree that computerized corporate...Ch. 16 - Certain liability and net worth items generally...Ch. 16 - Suppose a firm makes the following policy changes....Ch. 16 - AFN EQUATION Carter Corporations sales are...Ch. 16 - Prob. 2PCh. 16 - AFN EQUATION Refer to Problem 16-1 and assume that...Ch. 16 - PRO FORMA INCOME STATEMENT Austin Grocers recently...Ch. 16 - EXCESS CAPACITY Walter Industries has 5 billion in...
Ch. 16 - REGRESSION AND INVENTORIES jasper Furnishings has...Ch. 16 - PRO FORMA INCOME STATEMENT At the end of last...Ch. 16 - LONG-TERM FINANCING NEEDED At year-end 2014, total...Ch. 16 - SALES INCREASE Pierce Furnishings generated 2...Ch. 16 - REGRESSION AND RECEIVABLES Edwards Industries has...Ch. 16 - REGRESSION AND INVENTORIES Charlies Cycles Inc....Ch. 16 - EXCESS CAPACITY Edney Manufacturing Company has 2...Ch. 16 - Prob. 13PCh. 16 - EXCESS CAPACITY Krogh Lumbers 2014 financial...Ch. 16 - Comprehensive/Spreadsheet Problem 16-15...Ch. 16 - Integrated Case NEW WORLD CHEMICALS INC. 16-16...
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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. Return to the assumption that the company had 5 million in assets at the end of 2018, 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 Problem 9-1?arrow_forwardAFN EQUATION Refer to Problem 16-1 and assume that the company had 3 million in assets at the end of 2019. However, now assume that the company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in Problem 16-1?arrow_forwardAFN 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?arrow_forward
- AFN EQUATION Refer to Problem 16-1. What additional funds would be needed if the companys year-end 2019 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in Problem 16-1? Is the companys capital intensity the same or different? Explain.arrow_forwardAFN EQUATION Refer to problem 17-1. What additional funds would be needed if the companys year-end 2015 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in problem 17-1? Is the companys capital intensity the same or different? Explain.arrow_forwardAFN EQUATION Refer to problem 17-1. What additional funds would be needed if the company's year-end 2018 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in problem 17-1? Is the company's "capital intensity" the same or different? Explain.arrow_forward
- AFN EQUATION Refer to problem 17-1 and assume that the company had 3 million in assets at the end of 2018. However, now assume that the company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in problem 17-1?arrow_forwarda) Calculate the free cash flow generated by a firm which has earnings before interest and taxes of £30m, has depreciated its fixed assets by £1m, has invested £10m in new fixed assets and £5m in working capital during 2019 when it paid corporate tax at 20%. Explain what you have assumed about the firm’s asset base. (b) During 2019 the firm in (a) generated revenue of £60m, its cost of goods sold was £20m and its selling, general and administrative costs were £10m. You anticipate that over the next five years revenue will grow at 5% each year, the cost of goods sold will continue to be a fixed percentage of revenue, but due to managerial efficiencies administrative costs will not change. All forms of investment, together with depreciation will have a consistent relationship with revenue. At the end of this five-year period you believe that free cash flow will grow at 2% each year. What is the company worth at the end of 2019, assuming that its weighted average cost of capital is 5%?arrow_forward(B) Based on the following information, how much does the company need in external funds for the upcoming fiscal year? The company has Sales $ 5,700, Costs 4,200, Current assets 3,900, Fixed assets 8,100, Current liabilities 2,200, Long-term debt 3,750, and Equity 6,050. Sales increase 15% for the upcoming fiscal year. Payout ratio is 40% and Tax rate is 34%.arrow_forward
- 1. Calculate the following values for the company for the year ending in 20x9. Present evidence of all your calculations.a. NOPAT - Net Operating Profit after Taxesb. OCF - Operating Cash Flowc. FCF - Free Cash Flow2. Discuss what meaning each of the measures calculated in the previous question has, both for management and for investors and creditors, among other constituents.3. What is the main cause of the differences that exist between the company's earnings and the cash flows of the same evaluated period?arrow_forwardRefer to the financial statements and related disclosure notes of The Kroger Company for the fiscal year endingJanuary 30, 2016. You can locate the report online from “investor relations” at www.kroger.com.Notice that Kroger’s net income has increased over the three years reported. To supplement their analysis ofprofitability, many analysts like to look at “free cash flow.” A popular way to measure this metric is “structuralfree cash flow” (or as Warren Buffett calls it, “owner’s earnings”), which is calculated as net income from operations, plus depreciation and amortization, minus capital expenditures.Required:Determine free cash flows for Kroger in each of the three years reported. Compare that amount with net incomeeach year. What pattern do you detect?arrow_forwardCalculation and interpretation of ratios. Data for White Star Limited: Net operating profit after tax is $25 million (2018: $38 million). 1. Use the information above to calculate for 2019 and 2018: a working capital b current ratio c quick ratio d debt-to-equity ratio e return on equity ratio f earnings per share ratio. 2. Identify two warning signals that could have negative implications with respect to the company ’ s ability to generate cash flows to meet its future needs. In each case, explain why the signal you have identified could reflect a cash flow problem. 3. At the annual general meeting of White Star, the managing director, Ms Rose Dawson, made the following statement: ‘ Recently a number of articles in the financial press have questioned the financial position of our company. This criticism is totally unjustified. Net profit was $25 million and total assets have increased by $160 million. These results show that 2019 was a very successful year for White Star. ’ Comment on…arrow_forward
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