Question

In: Finance

BBP, Inc., with sales of $600,000, has the following balance sheet: BBP, Incorporated Balance Sheet as...

BBP, Inc., with sales of $600,000, has the following balance sheet:

BBP, Incorporated Balance Sheet as of 12/31/X0
Assets Liabilities and Equity
Cash $ 30,000 Accounts payable $ 24,000
Accounts receivable 60,000 Accruals 42,000
Inventory 84,000 Notes payable 70,000
Current assets 174,000 Current liabilities 136,000
Fixed assets 215,000 Common stock 70,000
Retained earnings 183,000
Total assets $ 389,000 Total liabilities and equity $ 389,000

The firm earns 13 percent on sales and distributes 25 percent of its earnings. Using the percent of sales, determine whether the firm will need external funds and forecast the new balance sheet for sales of $780,000 assuming that cash changes with sales and that the firm is not operating at capacity. Use newly issued short-term debt to cover any needs for additional finance. If the firm has excess funds, add them to cash. Round your answers to the nearest dollar. Enter your answers as positive values.

The firm -Select- will need external or will have excess funds of $_____

BBP, Incorporated Balance Sheet as of 12/31/X1
Assets Liabilities and Equity
Cash $    Accounts payable $   
Accounts receivable $    Accruals $   
Inventory $    Notes payable $   
Current assets $    Current liabilities $   
Fixed assets $    Common stock $   
Retained earnings $   
Total assets $    Total liabilities and equity $   

Would your answers be different if the firm distributed all of its earnings? Round your answers to the nearest dollar. Enter your answer as a positive value.

If management distributed all the firm's earnings, it -Select- will need external or will have excess funds of $_____

Solutions

Expert Solution

1.Additional Funds Needed = Total Assets * Sales Increase - Spontaneous Liabilities * Increase in sales - Addition to Retained Earnings

Additional Funds Needed = 389000 * 30% - 66000 * 30% - (780000 * 13% * (1 - 25%))

Additional Funds Needed = $20850

The firm -Select- will need external funds of $20850

Would your answers be different if the firm distributed all of its earnings? Round your answers to the nearest dollar. Enter your answer as a positive value.

Additional Funds Needed = Total Assets * Sales Increase - Spontaneous Liabilities * Increase in sales - Addition to Retained Earnings

Additional Funds Needed = 389000 * 30% - 66000 * 30% - (780000 * 13% * (1 - 100%))

Additional Funds Needed = $96900

If management distributed all the firm's earnings, it will need external funds of $96900

Please upvote

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Problem 23-04 BBP, Inc., with sales of $700,000, has the following balance sheet: BBP, Incorporated Balance...
Problem 23-04 BBP, Inc., with sales of $700,000, has the following balance sheet: BBP, Incorporated Balance Sheet as of 12/31/X0 Assets Liabilities and Equity Cash $ 42,000 Accounts payable $ 21,000 Accounts receivable 70,000 Accruals 35,000 Inventory 98,000 Notes payable 45,000 Current assets 210,000 Current liabilities 101,000 Fixed assets 195,000 Common stock 100,000 Retained earnings 204,000 Total assets $ 405,000 Total liabilities and equity $ 405,000 The firm earns 16 percent on sales and distributes 25 percent of its earnings....
Problem 23-07 RRM, Inc. has the following balance sheet: RRM, Incorporated Balance Sheet as of 12/31/X0...
Problem 23-07 RRM, Inc. has the following balance sheet: RRM, Incorporated Balance Sheet as of 12/31/X0 Assets Liabilities and Equity Cash $ 3,600 Accruals $ 5,200 Marketable securities 1,800 Accounts payable 16,100 Accounts receivable 16,420 Notes payable 7,000 Inventory 19,120 Long-term debt 22,000 Common stock 18,000 Plant and equipment 40,000 Retained earnings 12,640 $ 80,940 $ 80,940 Sales are currently $100,000, but management expects sales to rise to $120,000. The net profit margin is expected to be 11 percent, and...
The balance sheet for Tactex Controls Inc., provincially incorporated in 2018, reported the following components of...
The balance sheet for Tactex Controls Inc., provincially incorporated in 2018, reported the following components of equity on December 31, 2019. Tactex Controls Inc. Equity Section of the Balance Sheet December 31, 2019 Contributed capital: Preferred shares, $1.4 cumulative, unlimited shares authorized; 13,000 shares issued and outstanding $ 385,000 Common shares, unlimited shares authorized; 68,000 shares issued and outstanding 728,000 Total contributed capital $ 1,113,000 Retained earnings 371,000 Total equity $ 1,484,000 In 2020 and 2021, the company had the...
The balance sheet for Tactex Controls Inc., provincially incorporated in 2018, reported the following components of...
The balance sheet for Tactex Controls Inc., provincially incorporated in 2018, reported the following components of equity on December 31, 2019. Tactex Controls Inc. Equity Section of the Balance Sheet December 31, 2019 Contributed capital: Preferred shares, $2.8 cumulative, unlimited shares authorized; 27,000 shares issued and outstanding $ 399,000 Common shares, unlimited shares authorized; 82,000 shares issued and outstanding 742,000 Total contributed capital $ 1,141,000 Retained earnings 385,000 Total equity $ 1,526,000 In 2020 and 2021, the company had the...
The balance sheet for Tactex Controls Inc., provincially incorporated in 2015, reported the following components of...
The balance sheet for Tactex Controls Inc., provincially incorporated in 2015, reported the following components of equity on December 31, 2016. Tactex Controls Inc. Equity Section of the Balance Sheet December 31, 2016   Contributed capital:     Preferred shares, $1.5 cumulative, unlimited shares        authorized; 14,000 shares issued and outstanding $ 386,000     Common shares, unlimited shares authorized;         69,000 shares issued and outstanding. 729,000     Total contributed capital $ 1,115,000     Retained earnings 372,000     Total equity $ 1,487,000 In 2017 and 2018, the company had the...
Lloyd Inc. has sales of $400,000, a net income of $28,000, and the following balance sheet:...
Lloyd Inc. has sales of $400,000, a net income of $28,000, and the following balance sheet: Cash $103,680 Accounts payable $117,720 Receivables 204,120 Notes payable to bank 44,280 Inventories 550,800 Total current liabilities $162,000 Total current assets $858,600 Long-term debt 205,200 Net fixed assets 221,400 Common equity 712,800 Total assets $1,080,000 Total liabilities and equity $1,080,000 The new owner thinks that inventories are excessive and can be lowered to the point where the current ratio is equal to the industry...
Lloyd Inc. has sales of $150,000, a net income of $13,500, andthe following balance sheet:...
Lloyd Inc. has sales of $150,000, a net income of $13,500, and the following balance sheet: Cash $36,660 Accounts payable $34,320 Receivables 75,270 Notes payable to bank 16,380 Inventories 218,400 Total current liabilities $50,700 Total current assets $330,330 Long-term debt 50,700 Net fixed assets 59,670 Common equity 288,600 Total assets $390,000 Total liabilities and equity $390,000 The new owner thinks that inventories are excessive and can be lowered to the point where the current ratio is equal to the industry...
The following is the balance sheet for 20X5 for Marbell Inc. Marbell Inc. Balance Sheet as...
The following is the balance sheet for 20X5 for Marbell Inc. Marbell Inc. Balance Sheet as at December 31, 20X5 Marbell Inc. Balance Sheet as at December 31, 20X5 Assets Liabilities Cash $15,500 Accounts Payable $ 90,000 Accts. Rec 90,000 Notes Payable (non-spontaneous) 30,000 Inventory 60,000 Accrued Expenses 7,500 Current Assets 165,000 Current Liabilities 127,500 Fixed assets (non-spontaneous) 60,000 Common stock 75,500 Retained earnings 22,500 Total Assets $225,000 Total Liabilities + S.H Equity $225,000 Sales for 20X5 were $300,000. Sales...
Cold Duck Manufacturing Inc. has the following end-of-year balance sheet: Cold Duck Manufacturing Inc. Balance Sheet...
Cold Duck Manufacturing Inc. has the following end-of-year balance sheet: Cold Duck Manufacturing Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents $150,000 Accounts payable $250,000 Accounts receivable 400,000 Accrued liabilities 150,000 Inventories 350,000 Notes payable 100,000 Total Current Assets $900,000 Total Current Liabilities $500,000 Net Fixed Assets: Long-Term Bonds 1,000,000 Net plant and equipment $2,100,000 Total Debt $1,500,000 (cost minus depreciation) Common Equity Common stock 800,000 Retained earnings 700,000...
Following is the balance sheet for Lowe’s Companies Inc. LOWE’S COMPANIES INC. Consolidated Balance Sheet $...
Following is the balance sheet for Lowe’s Companies Inc. LOWE’S COMPANIES INC. Consolidated Balance Sheet $ millions, except par value Feb. 1, 2019 Current assets Cash and cash equivalents $1,124 Short-term investments 480 Merchandise inventory—net 27,634 Other current assets 2,064 Total current assets 31,302 Property, less accumulated depreciation 40,550 Long-term investments 563 Deferred income taxes—net 647 Goodwill 667 Other assets 2,189 Total assets $75,918 Current liabilities Short-term borrowings $1,588 Current maturities of long-term debt 2,442 Accounts payable 18,214 Accrued compensation...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT