Company capital intensity ratio the same or different

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Reference no: EM131589594

Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2015 to $9.2 million in 2016. Its assets totaled $5 million at the end of 2015. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2015, current liabilities were 1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accurals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%.

Refer to problem 9-1 ^^. What would be the additional funds needed if the company's year end 2015 assets had been $7 million? Assume that all other numbers, including sales, are the same as in problem 9-1 and that the company is operating at full capacity. Why is the AFN different from the one found in problem 9-1? Is the companys "capital intensity" ratio the same or different?

Reference no: EM131589594

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