Part 1) ABC expects sales of $19,995,000 this year. The cost of goods sold is expected to be $11,023,000 while selling, general and administrative (SGA) expenses are forecast to be $4,974,000. The firm expects depreciation expenses to be $291,000 and expects to pay an average interest rate of 5.6% on its $4,182,000 of interest-bearing debt. Given its tax rate of 40%, what is the expected net income for ABC this year?(If it is a negative, be sure and enter a negative sign).
Part 2) This year, ABC had sales of $23,544,000 and an Inventory Turnover Ratio (Sales Basis) of 8.7. ABC projects that next year, its sales will grow by 10 percent while its Inventory Turnover Ratio (Sales Basis) will drop to 8.4. If that happens, what will be the total dollar change in inventory between this year and next year?
Part 3) ABC purchases $449,000 worth of goods from its supplier each year on terms of 1/10, net 40 and currently does not take the discount. If ABC decided to raise enough capital to pay down accounts payable enough to take the discount, how much would they need to raise?