A firm has the following balance sheet: Sales for the year just ended were $400, and fixed assets were used at 80 percent of capacity, but its current assets were at optimal levels.Sales are expected to grow by 5 percent next year, the profit margin is 5 percent, and the dividend payout ratio is 60 percent.How much additional funds (AFN) will be needed?
A) $4.6
B) −$6.4 (Surplus)
C) $2.4
D) −$4.6 (Surplus)
E) $0.8

Question

A firm has the following balance sheet:  Sales for the year just ended were $400, and fixed assets were used at 80 percent of capacity, but its current assets were at optimal levels.Sales are expected to grow by 5 percent next year, the profit margin is 5 percent, and the dividend payout ratio is 60 percent.How much additional funds (AFN) will be needed?
A) $4.6 
B) −$6.4 (Surplus) 
C) $2.4 
D) −$4.6 (Surplus) 
E) $0.8

Quizplus · Accepted Answer

The Answer of A firm has the following balance sheet:  Sales for the year just ended were $400, and fixed assets were used at 80 percent of capacity, but its current assets were at optimal levels.Sales are expected to grow by 5 percent next year, the profit margin is 5 percent, and the dividend payout ratio is 60 percent.How much additional funds (AFN) will be needed?
A) $4.6 
B) −$6.4 (Surplus) 
C) $2.4 
D) −$4.6 (Surplus) 
E) $0.8

A Firm Has the Following Balance Sheet: Sales for the Year