Additional funds needed with excess capacity


Task: Additional Funds Needed with Excess Capacity

Question: A firm has the following balance sheet

Cash                               20.00

Accounts Payable             20.00

Accounts Receivable         20.00

Notes Payable                 40.00

Inventory                         20.00

Long-term debt                 80.00

Fixed Assets                180.00

Common Stock                 80.00

 

Retained Earning              20.00

 

 

Total Assets                240.00

Total Liabilities and Equity  240.00


Sales for the year just ended were $400, and fixed assets were used at 80 percent of capacity, but its current assets were at optimal levels. Sales are expected to grow by 5 percent next year, and the dividend payout ratio is 60 percent. How much additional funds (APN) will be needed?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Additional funds needed with excess capacity
Reference No:- TGS02082776

Now Priced at $20 (50% Discount)

Recommended (94%)

Rated (4.6/5)