The Barnsdale Corporation has the following ratios: A0*/S0 = 1.6; L0*/S0 = 0.4; profit margin = 0.10; and dividend payout ratio = 0.45, or 45%. Sales last year were $100 million. suppose Barnsdale’s financial consultants report (1) that the inventory turnover ratio (sales/inventory) is 3, compared with an industry average of 4, and (2) that Barnsdale could reduce inventories and thus raise its turnover ratio to 4 without affecting its sales, profit margin, or other asset turnover ratios. 1.) Under these conditions, use the AFN equation to determine the amount of additional funds Barnsdale would require during the 1st year if sales grow at a rate of 20% per year. 2.)Under these conditions, use the AFN equation to determine the amount of additional funds Barnsdale would require during the 2nd year if sales grow at a rate of 20% per year.
The Barnsdale Corporation has the following ratios: A0*/S0 = 1.6; L0*/S0 = 0.4; profit margin = 0.10; and dividend payout ratio = 0.45, or 45%. Sales last year were $100 million. suppose Barnsdale’s financial consultants report (1) that the inventory turnover ratio (sales/inventory) is 3, compared with an industry average of 4, and (2) that Barnsdale could reduce inventories and thus raise its turnover ratio to 4 without affecting its sales, profit margin, or other asset turnover ratios. 1.) Under these conditions, use the AFN equation to determine the amount of additional funds Barnsdale would require during the 1st year if sales grow at a rate of 20% per year. 2.)Under these conditions, use the AFN equation to determine the amount of additional funds Barnsdale would require during the 2nd year if sales grow at a rate of 20% per year.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 51E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
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The Barnsdale Corporation has the following ratios: A0*/S0 = 1.6; L0*/S0 = 0.4; profit margin = 0.10; and dividend payout ratio = 0.45, or 45%. Sales last year were $100 million. suppose Barnsdale’s financial consultants report (1) that the inventory turnover ratio (sales/inventory) is 3, compared with an industry average of 4, and (2) that Barnsdale could reduce inventories and thus raise its turnover ratio to 4 without affecting its sales, profit margin, or other asset turnover ratios.
1.) Under these conditions, use the AFN equation to determine the amount of additional funds Barnsdale would require during the 1st year if sales grow at a rate of 20% per year.
2.)Under these conditions, use the AFN equation to determine the amount of additional funds Barnsdale would require during the 2nd year if sales grow at a rate of 20% per year.
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