1) The Webster Wonders Corporation has started selling the new product and they wish you to aid them find out if they require extra funding (AFN) next year. By using AFN formula method, compute WWC’s AFN for next year (if any).
The latest financial statements of company are given below. Sales growth next year is forecast to be 20% and net profit margin is expected to stay the same as it is this year. As well company expects to pay out 60% of any profits as dividends.
Webster Wonders Corporation
Financial Statements
Historical
2013
Income statement:
Sales $1,000
Costs $950
Profit $50
Dividends $0
Balance Sheet:
Cash $100
A/R $200
Inventory $200
Fixed assets $500
Total assets $1,000
A/P $50
Accruals $50
N/P $150
LTD $400
Common Stock $100
Net earnings $250
Total Liabilities & Equity $1,000