Question
In: Finance
Blue Elk Manufacturing reported sales of $743,000 at the end of last year; but this year,...
Blue Elk Manufacturing reported sales of $743,000 at the end of last year; but this year, sales are expected to grow by 6%. Blue Elkexpects to maintain its current profit margin of 22% and dividend payout ratio of 20%. The firm’s total assets equaled $500,000 and were operated at full capacity. Blue Elk’s balance sheet shows the following current liabilities: accounts payable of $80,000, notes payable of $35,000, and accrued liabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm’s AFN for the coming year?
a. -$105,313
b. -$117,014
c. -$152,118
d. -$140,417
A negatively-signed AFN value represents:
a surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends.
a point at which the funds generated within the firm equal the demands for funds to finance the firm’s future expected sales requirements.
a shortage of internally generated funds that must be raised outside the company to finance the company’s forecasted future growth.
Because of its excess funds, Blue Elk is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Blue Elk pay to shareholders without needing to raise any external capital? (Hint: What can Blue Elk increase its dividend payout ratio to before the AFN becomes positive?)
a. 87.5%
b. 78.8%
c. 61.2%
d. 74.4%
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Blue Elk Manufacturing reported sales of $720,000 at the end of last year, but this year,...
Blue Elk Manufacturing reported sales of $720,000 at the end of
last year, but this year, sales are expected to grow by 7%. Blue
Elk expects to maintain its current profit margin of 21% and
dividend payout ratio of 30%. The following information was taken
from Blue Elk’s balance sheet: Total assets: $400,000 Accounts
payable: $80,000 Notes payable: $35,000 Accrued liabilities:
$70,000 Based on the AFN equation, the firm’s AFN for the current
year is _________.
a. -86,174
b. -105,324...
Blue Elk Manufacturing reported sales of $720,000 at the end of last year, but this year,...
Blue Elk Manufacturing reported sales of $720,000 at the end of
last year, but this year, sales are expected to grow by 8%. Blue
Elk expects to maintain its current profit margin of 23% and
dividend payout ratio of 10%. The following information was taken
from Blue Elk’s balance sheet:
Total assets:
$400,000
Accounts payable:
$80,000
Notes payable:
$45,000
Accrued liabilities:
$80,000
Based on the AFN equation, the firm’s AFN for the current year
is _____ .
A positively signed...
2. More on the AFN (Additional Funds Needed) equation Blue Elk Manufacturing reported sales of $743,000...
2. More on the AFN (Additional Funds Needed)
equation
Blue Elk Manufacturing reported sales of $743,000 at the end of
last year, but this year, sales are expected to grow by 8%. Blue
Elk expects to maintain its current profit margin of 24% and
dividend payout ratio of 20%. The following information was taken
from Blue Elk’s balance sheet:
Total assets:
$400,000
Accounts payable:
$65,000
Notes payable:
$40,000
Accrued liabilities:
$80,000
Based on the AFN equation, the firm’s AFN for...
Green Caterpillar Garden Supplies Inc. reported sales of $743,000 at the end of last year; but...
Green Caterpillar Garden Supplies Inc. reported sales of
$743,000 at the end of last year; but this year, sales are expected
to grow by 9%. Green Caterpillar expects to maintain its current
profit margin of 24% and dividend payout ratio of 15%. The firm’s
total assets equaled $425,000 and were operated at full capacity.
Green Caterpillar’s balance sheet shows the following current
liabilities: accounts payable of $80,000, notes payable of $45,000,
and accrued liabilities of $65,000. Based on the AFN...
At the end of last year, Bantern Corp. reported sales per shareof $20.54. Sales are...
At the end of last year, Bantern Corp. reported sales per share
of $20.54. Sales are expected to grow at a rate of 5% per year for
the forseeable future. The company’s profit margin has remained
steady at 18% for the last several years. Analysts expect that
Bantern will have a return on equity of 16% for the forseeable
future.What is Bantern’s retention rate?What is Bantern’s estimated EPS for the next year?What is Bantern’s free cash flow to equity for...
Fuzzy Button Clothing Company reported sales of $720,000 at the end of last year; but this...
Fuzzy Button Clothing Company reported sales of $720,000 at the
end of last year; but this year, sales are expected to grow by 9%.
Fuzzy Button expects to maintain its current profit margin of 21%
and dividend payout ratio of 15%. The firm’s total assets equaled
$500,000 and were operated at full capacity. Fuzzy Button’s balance
sheet shows the following current liabilities: accounts payable of
$75,000, notes payable of $25,000, and accrued liabilities of
$70,000. Based on the AFN (Additional...
A manufacturing company producing medical devices reported $108,000,000 in sales over the last year. At the...
A manufacturing company producing medical devices reported
$108,000,000 in sales over the last year. At the end of the same
year, the company had $42,000,000 worth of inventory of
ready-to-ship devices.
a. Assuming that units in inventory are valued (based on COGS)
at $2,000 per unit and are sold for $4,000 per unit, what are the
annual inventory turns? The company uses a 20 percent per year cost
of inventory. That is, for the hypothetical case that one unit of...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and...
Last year, Michelson Manufacturing reported $10,250 of sales,
$3,500 of operating costs other than depreciation, and $1,250 of
depreciation. The company had no amortization charges, it had
$3,500 of bonds outstanding that carry a 6.5% interest rate, and
its federal-plus-state income tax rate was 21%. This year's data
are expected to remain unchanged except for one item, depreciation,
which is expected to increase by $725. By how much will the
depreciation change cause the firm's net after-tax income and its...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and...
Last year, Michelson Manufacturing reported $10,250 of sales,
$3,500 of operating costs other than depreciation, and $1,250 of
depreciation. The company had no amortization charges, it had
$3,500 of bonds outstanding that carry a 6.5% interest rate, and
its federal-plus-state income tax rate was 25%. This year’s data
are expected to remain unchanged except for one item, depreciation,
which is expected to increase by $725. By how much will the
depreciation change cause the firm’s net after-tax income to
change?...
The Blue division of the Leaf Company reported the following data for the current year: Sales...
The Blue division of the Leaf Company reported the following
data for the current year:
Sales
$2,600,000
Variable Costs
$2,100,000
Controllable Fixed Costs
$450,000
Average Operating Assets
$5,050,000
Senior Management is unhappy with the investment centre’s return
on investment. It asks the manager of the Blue division to submit
plans to improve the ROI in the next year. The manager believes it
is reasonable to consider each of the following independent courses
of action
1. Increase sales by $270,000 with...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Question #1 C4H10O with a butanol combustion cycle (formation enthalpy-332,000 kJ / kmol) 25 per cent...
- Suppose a survey revealed that 19% of 494 respondents said they had in the past sold...
- Topic: Choose a company which are you are starting, and a main product or service that...
- 4. Why did the United States and the Soviet Union find themselves in a “Cold War”...
- The Facts: Ann and Bill decided to start a coffee shop. They agreed Bill would provide...
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
- A firm's bonds have a maturity of 8 years with a $1,000 face value, have an...
ADVERTISEMENT