BA350 Financial Management: 14-6 (Additional Funds Needed) The Booth Company’s sales are forecasted

BA350 Financial Management

14-6 Additional Funds Needed
The Booth Company’s sales are forecasted to increase from $1,000 in 2007 to $2,000 in 2008. Here is the December 31, 2007, balance sheet:
Cash 100 Accounts payable 50
Accounts receivable 200 Notes payable 150
Inventories 200 Accruals 50
Net fixed assets 500 Long-term debt 400
Common stock 100
Retained earnings 250
Total assets 1,000 Total liabilities and equity 1,000

Booth’s fixed assets were used to only 50% of capacity during 2007, 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%, and its payout ratio will be 60%.
What is Booth’s additional funds needed (AFN) for the coming year?
Powered by