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, Green Moose Industries generated $350,000 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 Green Moose Industries’s assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Green Moose Industries’s expected sales.
Added by Purificaci-N C.
Step 1
- Current sales = $14,000,000 - Expected increase in sales = 19% - Expected sales = Current sales × (1 + Expected increase) - Expected sales = $14,000,000 × (1 + 0.19) = $14,000,000 × 1.19 = $16,660,000 Show more…
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