Assets Current Assets: Cash and equivalents Accounts receivable Inventories Total Assets $150,000 400,000 350,000 $900,000 Total Current Assets Net Fixed Assets: Long-Term Bonds Net plant and equipment(cost minus depreciation) $2,100,000 Total Debt Common Equity Common stock Retained earnings Total Common Equity $3,000,000 Total Liabilities and Equity Liabilities Current Liabilities: Accounts payable Accrued liabilities Ⓒ$648,000 O $594,000 $540,000 O $486,000 Notes payable Total Current Liabilities O $72,000 O $86,400 O $64,800 O $79,200 $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Cold Duck Manufacturing Inc. generated $300,000 net income on sales of $13,500,000. The firm expects sales to increase by 18% this coming year and also expects to maintain its long-run dividend payout ratio of 40%. 800,000 700,000 $1,500,000 $3,000,000 Suppose Cold Duck Manufacturing Inc.'s assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Cold Duck Manufacturing Inc.'s expected sales. When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Cold Duck Manufacturing Inc. this year?
Assets Current Assets: Cash and equivalents Accounts receivable Inventories Total Assets $150,000 400,000 350,000 $900,000 Total Current Assets Net Fixed Assets: Long-Term Bonds Net plant and equipment(cost minus depreciation) $2,100,000 Total Debt Common Equity Common stock Retained earnings Total Common Equity $3,000,000 Total Liabilities and Equity Liabilities Current Liabilities: Accounts payable Accrued liabilities Ⓒ$648,000 O $594,000 $540,000 O $486,000 Notes payable Total Current Liabilities O $72,000 O $86,400 O $64,800 O $79,200 $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Cold Duck Manufacturing Inc. generated $300,000 net income on sales of $13,500,000. The firm expects sales to increase by 18% this coming year and also expects to maintain its long-run dividend payout ratio of 40%. 800,000 700,000 $1,500,000 $3,000,000 Suppose Cold Duck Manufacturing Inc.'s assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Cold Duck Manufacturing Inc.'s expected sales. When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Cold Duck Manufacturing Inc. this year?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter7: Fixed Assets, Natural Resources, And Intangible Assets
Section: Chapter Questions
Problem 7.3.3MBA
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