Response to the following problem:
The Booth Company's sales are forecasted to increase from $1,000 in 2006 to $2,000 in 2007. Here is the December 31, 2006, balance sheet:
|
Cash
|
$100
|
Accounts payable
|
$ 50
|
|
Accounts receivable
|
200
|
Not payable
|
150
|
|
Inventories
|
200
|
Accruals
|
50
|
|
Net fixed assets
|
500
|
Long term debt
|
400
|
|
|
|
Common stock
|
100
|
|
|
|
Retained earnings
|
250
|
|
Total assets
|
$1,000
|
Total liabilities and equity
|
$1,000
|
Booth's fixed assets were used to only 50 percent of capacity during 2006, but its current assets were at their proper levels. All assets except fixed assets increase at the same rate as sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 5 percent, and its payout ratio will be 60 percent.
What is Booth's additional funds needed (AFN) for the coming year?