Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 27P
Summary Introduction
To calculate: The required amount of new funds.
Introduction:
Financing:
A process through which a company procures funds for its business operations is termed as financing. A company raises its funds from different sources, such as debt, eq uity, bank loans, and like.
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Suppose that Gyp Sum Industries
currently has the balance sheet shown.
below, and that sales for the year just
ended were $9.5 million. The firm also
has a profit margin of 25 percent and a
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proportional to sales. The company maintains a constant dividend payout ratio and debt-equity ratio and is operating at full capacity. What is the maximum dollar Increase in sales that can
be sustained next year assuming no new equity is issued?
Multiple Choice
O
O
O
O
O
$2,151
$1,211
$2,804
$2,267
$1,667
Appalachian Registers, Inc. (ARI) has current sales of $50 million. Sales are expected to grow to $70 million next year. ARI currently has accounts receivable of
$9 million, inventories of $15 million, and net fixed assets of $18 million. These assets are expected to grow at the same rate as sales over the next year.
Accounts payable are expected to increase from their current level of $14 million to a new level of $18 million next year. ARI wants to increase its cash balance
at the end of next year by $2 million over its current cash balances, which average $4 million. Earnings after taxes next year are forecasted to be $10 million.
Next year, ARI plans to pay dividends of $2 million, up from $500,000 this year. ARI's marginal tax rate is 34 percent.
How much external financing is required by ARI next year? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not
1,200,000. Round your answer to two decimal places.
$
million
Chapter 4 Solutions
Foundations of Financial Management
Ch. 4 - What are the basic benefits and purposes of...Ch. 4 - Explain how the collections and purchases...Ch. 4 - With inflation, what are the implications of using...Ch. 4 - Explain the relationship between inventory...Ch. 4 - Prob. 5DQCh. 4 - Discuss the advantage and disadvantage of level...Ch. 4 - What conditions would help make a percent-of-sales...Ch. 4 - Prob. 1PCh. 4 - Philip Morris expects the sales for his clothing...Ch. 4 - Galehouse Gas Stations Inc. expects sales to...
Ch. 4 - The Alliance Corp. expects to sell the following...Ch. 4 - Prob. 5PCh. 4 - Cyber Security Systems had sales of 3,500 units at...Ch. 4 - Dodge Ball Bearings had sales of 15,000 units at...Ch. 4 - Sales for Ross Pro’s Sports Equipment are expected...Ch. 4 - Vitale Hair Spray had sales of 13,000 units in...Ch. 4 - Delsing Plumbing Company has beginning inventory...Ch. 4 - On December 31 of last year, Wolfson Corporation...Ch. 4 - At the end of January, Higgins Data Systems had an...Ch. 4 - At the end of January, Mineral Labs had an...Ch. 4 - Convex Mechanical Supplies produces a product with...Ch. 4 - The Bradley Corporation produces a product with...Ch. 4 - Sprint Shoes Inc. had a beginning inventory of...Ch. 4 - J. Lo’s Clothiers has forecast credit sales for...Ch. 4 - Simpson Glove Company has made the following sales...Ch. 4 - Watt’s Lighting Stores made the following sales...Ch. 4 - Ultravision Inc. anticipates sales of $290,000...Ch. 4 - The Denver Corporation has forecast the following...Ch. 4 - Wright Lighting Fixtures forecasts its sales in...Ch. 4 - The Volt Battery Company has forecast its sales in...Ch. 4 - Graham Potato Company has projected sales of...Ch. 4 - Harry’s Carryout Stores has eight locations. The...Ch. 4 - Archer Electronics Company’s actual sales and...Ch. 4 - Prob. 27PCh. 4 - The Manning Company has financial statements as...Ch. 4 - Conn Man’s Shops, a national clothing chain, had...
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