Explore Westonci.ca, the premier Q&A site that helps you find precise answers to your questions, no matter the topic. Find reliable answers to your questions from a wide community of knowledgeable experts on our user-friendly Q&A platform. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.
Sagot :
Based on the AFN equation, the AFN for the coming year will be -$16000.
How to calculate the AFN?
Last year's sales =$200,000
Sales growth rate = g = 40%
Forecasted sales = S0 × (1 + ) = 280,000
∆S = change in sales = S1 − S0 = $80,000
Last year's total assets = A*0 = A*0 since full capacity $135,000
Forecasted total assets = A*1 = A*0 × (1 + g) = $189,000
Last year's accounts payable = $50,000
Last year's accruals= $20,000
L*0 = payables + accruals = $70,000
Profit margin = M = 20.0%
Target payout ratio = 25.0%
Retention ratio = (1 − Payout) = 75.0%
AFN = (A*0/S0)ΔS – (L*0/S0)ΔS – Margin × S1 × (1 − Payout)
AFN = $54,000 – $28,000 – $42,000
= -$16,000
The complete question goes thus:
Chua Chang & Wu Inc. is planning its operations for next year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in your forecast are shown below.
Last year's sales = $200,000
Sales growth rate = 40%
Last year's accounts payable = $50,000
Last year's notes payable = $15,000
Last year's accruals = $20,000
Based on the AFN equation, what is the AFN for the coming year?
Learn more about equations on:
https://brainly.com/question/2972832
#SPJ1
Thanks for using our service. We aim to provide the most accurate answers for all your queries. Visit us again for more insights. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Thank you for using Westonci.ca. Come back for more in-depth answers to all your queries.