1. Mars Company had net sales of $18 million in the year that just ended. Next year the company's management expects a 15 percent increase in sales. If cost of goods sold is 60 percent of sales and inventory is 25 percent of sales, what would you estimate sales, inventory and cost of good sold be next year?
2. Lavaca Inc. management expects net sales to be $855,000, total costs to be $647,000 and to pay taxes at an average rate of 32 percent this year. If the Lavaca pays out 38 percent of its earnings as dividends, what is its retention ration? How much will Lavaca's retained earning increase?
3. Spurlock Inc. had net income of $266,778 in its most recent fiscal year and total assets of $1,833,400 at the end of the year. The company's total debt ratio (total debt to total assets) is 35 percent and Spurlock retains 60 percent of its income every year. What is Spurlock's Internal growth rate? What is its sustainable growth rate/
4. Using the information in Sample test problem 3 what is Spurlock's capital intensity ratio if the company has net sales of $3,557,100? What does this ratio tell us?
5. Edgefield Excavation Company has total assets of $4,976,456 sales of $1,225,700 and net income of $587,000. The company's management expects sales to grow by 9 percent next year. All costs (including taxes) and assets vary directly with sales, and the firm expects to maintain a payout ratio of 35 percent. Calculate the external funds needed (EFN) by Edgefield. What would Edgefield's payout ration have to be in order for the company's EFN to equal Zero?