Find the best solutions to your questions at Westonci.ca, the premier Q&A platform with a community of knowledgeable experts. Experience the convenience of getting reliable answers to your questions from a vast network of knowledgeable experts. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly 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
Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.
