Homework Help is Here – Start Your Trial Now!
Business
Finance
ue Elk Manufacturing has the following end-of-year balance sheet: Blue Elk Manufacturing Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents Accounts payable Accrued liabilities Accounts receivable Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 O $456,000 O $684,000 O $598,500 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000 e firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, ue Elk Manufacturing generated $500,000 net income on sales of $14,000,000. The firm expects sales to increase by 19% this coming year and also pects to maintain its long-run dividend payout ratio of 40%. uppose Blue Elk Manufacturing's assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets at is necessary to support Blue Elk Manufacturing's expected sales. (Note: Do not round intermediate calculations.)

ue Elk Manufacturing has the following end-of-year balance sheet: Blue Elk Manufacturing Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents Accounts payable Accrued liabilities Accounts receivable Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 O $456,000 O $684,000 O $598,500 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000 e firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, ue Elk Manufacturing generated $500,000 net income on sales of $14,000,000. The firm expects sales to increase by 19% this coming year and also pects to maintain its long-run dividend payout ratio of 40%. uppose Blue Elk Manufacturing's assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets at is necessary to support Blue Elk Manufacturing's expected sales. (Note: Do not round intermediate calculations.)

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter7: Fixed Assets, Natural Resources, And Intangible Assets
Section: Chapter Questions
Problem 7.3.3MBA
See similar textbooks
icon
Related questions
Question

Please help out with practice problem and write cleary 

When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Blue Elk Manufacturing this year? (Note: Do not round intermediate calculations.) O $79,800 O $60,800 O $91,200 O $76,000 In addition, Blue Elk Manufacturing is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise externally from the capital markets. Assume that the firm's profit margin and dividend payout ratio are expected to remain constant. Given the preceding information, Blue Elk Manufacturing is expected to generate $ earnings. (Note: Do not round intermediate calculations.) According to the AFN equation and projections for Blue Elk Manufacturing, the firm's AFN is $ calculations.) from operations that will be added to retained (Note: Do not round intermediate
Transcribed Image Text:When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Blue Elk Manufacturing this year? (Note: Do not round intermediate calculations.) O $79,800 O $60,800 O $91,200 O $76,000 In addition, Blue Elk Manufacturing is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise externally from the capital markets. Assume that the firm's profit margin and dividend payout ratio are expected to remain constant. Given the preceding information, Blue Elk Manufacturing is expected to generate $ earnings. (Note: Do not round intermediate calculations.) According to the AFN equation and projections for Blue Elk Manufacturing, the firm's AFN is $ calculations.) from operations that will be added to retained (Note: Do not round intermediate
1. The Additional Funds Needed (AFN) equation Blue Elk Manufacturing has the following end-of-year balance sheet: Blue Elk Manufacturing Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Liabilities: Accounts payable Accrued liabilities Current Assets: Cash and equivalents Accounts receivable Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 O $456,000 O $684,000 O $598,500 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000 The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Blue Elk Manufacturing generated $500,000 net income on sales of $14,000,000. The firm expects sales to increase by 19% this coming year and also expects to maintain its long-run dividend payout ratio of 40%. Suppose Blue Elk Manufacturing's assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Blue Elk Manufacturing's expected sales. (Note: Do not round intermediate calculations.)
Transcribed Image Text:1. The Additional Funds Needed (AFN) equation Blue Elk Manufacturing has the following end-of-year balance sheet: Blue Elk Manufacturing Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Liabilities: Accounts payable Accrued liabilities Current Assets: Cash and equivalents Accounts receivable Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 O $456,000 O $684,000 O $598,500 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000 The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Blue Elk Manufacturing generated $500,000 net income on sales of $14,000,000. The firm expects sales to increase by 19% this coming year and also expects to maintain its long-run dividend payout ratio of 40%. Suppose Blue Elk Manufacturing's assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Blue Elk Manufacturing's expected sales. (Note: Do not round intermediate calculations.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 6 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS