Question

Question 1:

Broussard Skateboard's sales are expected to increase by 15% from $8.8 million in 2016 to $10.12 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 70%. What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar.
$

Assume that an otherwise identical firm had $6 million in total assets at the end of 2016. Broussard's capital intensity ratio (A₀*/S₀) is higher than / lower than / equal to than the otherwise identical firm; therefore, Broussard is less / more / the same capital intensive - it would require smaller /  larger / the same increase in total assets to support the increase in sales.

Question 2:

Broussard Skateboard's sales are expected to increase by 25% from $7.8 million in 2016 to $9.75 million in 2017. Its assets totaled $2 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 55%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Round your answer to the nearest dollar. Do not round intermediate calculations.

Answer 1

Q1)
		2016	2017
	Sales	8800000.00	10120000
	Assets	5000000.00	5750000
	Accounts payable	450000.00	517500.00
	Notes payable	500000.00	575000.00
	Accruals	450000.00	517500.00
	Current laibilities	1400000.00	1610000
	Profit after tax	528000.00	607200.00
	Dividends @ 70%	369600.00	425040.00
	Retained earnings	158400.00	182160.00
	Other liability & equity	3441600.00	3441600.00
	AFN		516240.0000
	Assume that an otherwise identical firm had $6 million in total assets at the end of 2016. Broussard's capital intensity ratio (A0*/S0) is lower than to than the otherwise identical firm; therefore, Broussard is less capital intensive - it would require smaller increase in total assets to support the increase in sales.
Q2)		2016	2017
	Sales	7800000.00	9750000
	Assets	2000000.00	2500000
	Accounts payable	450000.00	562500.00
	Notes payable	500000.00	625000.00
	Accruals	450000.00	562500.00
	Current laibilities	1400000.00	1750000.00
	Profit after tax	468000.00	585000.00
	Dividends @ 55%	257400.00	321750.00
	Retained earnings	210600.00	263250.00
	Other liability & equity	389400.00	389400.00
	AFN		97350.0000