16-9 SALES INCREASE Pierce Furnishings generated $2 million in sales during 2008, and its year-end total assets were $1.5 million. Also, at year-end 2008, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2009, the company estimates that its assets must increase by $0.75 for every $1.00 increase in sales. Pierce’s profit margin is 5%, and its retention ratio is 40%. How large a sales increase can the company achieve without having to raise funds externally?

16-9 SALES INCREASE Pierce Furnishings generated $2 million in sales during 2008, and its year-end total assets were $1.5 million. Also, at year-end 2008, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2009, the company estimates that its assets must increase by $0.75 for every $1.00 increase in sales. Pierce’s profit margin is 5%, and its retention ratio is 40%. How large a sales increase can the company achieve without having to raise funds externally?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter9: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 4P: Sales Increase Maggies Muffins Bakery generated 5 million in sales during 2018, and its year-end...

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Sales Increase Maggies Muffins Bakery generated 5 million in sales during 2018, and its year-end total assets were 2.5 million. Also, at year-end 2018, current liabilities were 1 million, consisting of 300,000 of notes payable, 500,000 of accounts payable, and 200,000 of accruals. Looking ahead to 2019, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 7%, and its payout ratio will be 80%. How large a sales increase can the company achieve without having to raise funds externallythat is, what is its self-supporting growth rate?
Austin Grocers recently reported the following 2016 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 40 Interest EBT Taxes (40%) Net income. $160 64 $96 $32 564 Dividends Addition to retained earnings i For the coming year, the company is forecasting a 35% increase in sales, and it expects that its year end operating costs, including depreciation, will equal 75% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant. a. What is Austin's projected 2017 net income? Enter your answer in millions. For example, an answer of $13,000,000 should be entered as 13. Round your answer to two decimal places. million b. What is the expected growth rate in Austin's dividerids? Do not round your intermediate calculations. Round your answer to two decimal places.
The Optical scam company has forecast a sales growth of 20 percent for next year. The current financial statements are shown below: What is pro forma balance sheet for next year? Sales $ 31,600,000 Costs 26,675,500 Taxable income $ 4,924,500 Taxes 1,723,575 Net income $ 3,200,925 Dividends $ 1,280,370 Addition to retained earnings 1,920,555 Balance Sheet Assets Liabilities and Owners' Equity Current assets $ 7,320,000 Accounts payable $ 5,688,000 Long-term debt 6,636,000 Fixed assets 20,172,000 Common stock $ 1,594,000 Accumulated retained earnings 13,574,000 Total equity $ 15,168,000 Total assets $ 27,492,000 Total liabilities and equity
Sales increase Pierce Furnishings generated $2 million in sales during 2015, and it's year-end total assets were $1.5 million. Also, at year-end 2015, current liabilities were $500, 000 consisting of $ 200, 000 of notes payable, and $ 200, 000 of accounts payable and $100, 000 of accrued liabilities. Looking ahead to 2016, the company estimates that it's assets must increase by $ 0.75 for every $ 1.00 increase in sales. Pierce's profit margin is 5%, and it's retention ratio is 40%. Hoelw large of a sales increase can the company achieve without having to raise funds externally.
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here: Sales Costs Taxable income Taxes Net income Dividends Addition to retained earnings Current assets Fixed assets Total assets Assets Current assets Fixed assets INCOME STATEMENT Total assets $ 7,230,000 18,390,000 $ 1,149,982 1,724,853 Assets b-2. External financing needed c. Sustainable growth rate $ 25,620,000 a. Calculate the external funds needed for next year using the equation from the chapter. Note: Do not round intermediate calculations. External financing needed b-1. Prepare the firm's pro forma balance sheet for next year. Note: Do not round intermediate calculations. BALANCE SHEET Short-term debt Long-tern debt Common stock Accumulated retained earnings $ 30,500,000 26,077,300 $ 4,422,700 1,547,945 $ 2,874,755 Liabilities and Equity Total equity Total liabilities and…
The Optical Scam Company has forecast an 17 percent sales growth rate for next year. The current financial statements are shown below. Current assets, fixed assets, and short-term debt are proportional to sales. INCOME STATEMENT Sales $ 47,000,000 Costs 37,900,000 Taxable income $ 9,100,000 Taxes 3,185,000 Net income $ 5,915,000 Dividends $ 2,366,000 Additions to retained earnings $ 3,549,000 BALANCE SHEET Assets Liabilities and Equity Current assets $ 15,930,000 Short-term debt $ 12,690,000 Long-term debt 13,190,000 Fixed assets 40,000,000 Common stock $ 4,000,000 Accumulated retained earnings 26,050,000 Total equity $ 30,050,000 Total assets $ 55,930,000 Total liabilities and equity $ 55,930,000…
A company reports the following for the prior year: $1.6 million in sales $1 million in total assets $160,000 in net income $800,000 in equity (at the beginning of this prior year) $ 520,000 in current assets $480,000 in fixed assets $48,000 in accounts payable $32,000 in accrued liabilities The company projects that the sales will grow at 30%. Calculate the AFN for this company assuming 80% retention ratio.
Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next year will be $1.68 million. Interest expense is expected to remain unchanged at $35,000,and the firm plans to pay $74,000 in cash dividends. Metroline Manufacturing's income statement for the previous year is given along with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components. a. Use the percent-of-sales method to prepare a pro forma income statement for next year. b. Use fixed and variable cost data to develop a pro forma income statement for next year. c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of income? Explain why.
Krogen Grocer’s 2016 financial statements show net income of $1,680 million, sales of $153,466 million, and average total assets of $46,350 million.How much is Krogen Grocer’s return on sales for the year? Question 22 options: A) 1.09% B) 30.20% C) 3.62% D) 6.42%
A company reports the following for the prior year: $1.6 million in sales $1 million in total assets $160, 000 in net income $800, 000 in equity (at the beginning of this prior year) $520, 000 in current assets $480, 000 in fixed assets $48, 000 ir accounts payable $32,000 in accrued liabilities The company projects that the sales will grow at 30 % . Calculate the AFN or this company assuming 80% retention ratio. a. $134,425 b. $127,650 c. $109,600 d. $76,950
Quantitative Problem 1: Beasley Industries' sales are expected to increase from $4 million in 2017 to $5 million in 2018, or by 25%. Its assets totaled $2 million at the end of 2017. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2017, current liabilities are $720,000, consisting of $140,000 of accounts payable, $350,000 of notes payable, and $230,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 50%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar
Projected Operating Assets Berman & Jaccor Corporation's current sales and partial balance sheet are shown below. This year Sales $ 1,000 Balance Sheet: Assets Cash $ 150 Short-term investments $ 130 Accounts receivable $ 300 Inventories $ 250 Total current assets $ 830 Net fixed assets $ 600 Total assets $ 1,430 Sales are expected to grow by 10% next year. Assuming no change in operations from this year to next year, what are the projected total operating assets? Do not round intermediate calculations. Round your answer to the nearest dollar. $