Capital intensity different comparing to initial situation

Assignment Help Financial Management

Reference no: EM131974266

Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $6 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 7%, and the forecasted retention ratio is 45%. Use the AFN equation to forecast Carlsbad's additional funds needed for the coming year. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest cent.

Now assume the company's assets totaled $4 million at the end of 2016. Is the company's "capital intensity" the same or different comparing to initial situation?

Reference no: EM131974266

Questions Cloud

Using the liquidity premium hypothesis : Using the liquidity premium hypothesis, plot the current yield curve.

Calculate earnings after taxes for each of your alternative : Given that Medical Equipment of Orlando’s earnings before interest and taxes are $500,000, calculate earnings after taxes for each of your alternatives

Calculate the effective interest rate for fidelity bank : Calculate the effective interest rate for Fidelity Bank and Southwest Bank.

Company have once again advocated their pet projects : Three vice presidents of a manufacturing company have once again advocated their pet projects.

Capital intensity different comparing to initial situation : Now assume the company's assets totaled $4 million at the end of 2016. Is the company's "capital intensity" the same or different comparing to initial situation

Cover just the cost of the additional physicians and NPs : Calculate the capitation rate that would be needed to cover just the cost of the additional physicians and NPs.

Mutually exclusive projects : Projects A and B are mutually exclusive projects. What guidance, if any, does the IRR method provide as to whether the project should be accepted?

What is the IRR and should the project be accepted : If the cost of capital is 12% per year, what is the IRR and should the project be accepted?

What is the IRR for investor : The entrepreneur expects to sell 26,236.00 units per year each year going forward in perpetuity. What is the IRR for the investor?

User Account

All Pages