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Estimate brigmans financing requirements for 2016

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Reference no: EM132354711

Question

(Financial forecasting - discretionary financing needs) Brigman Industries is evaluation its financing requirements for the coming year. The firm has been in business for 1 year, and the CFO expects that the relationship between firm sales and its operating expenses, current assets, its assets, and current liabilities will remain at their current proportion of sales.

Last year Brigman had $12 million in sales and net income of $1.2 million. The firm anticipates that next year's sales will reach $18 million, with net income rising to $2 million. Given its present high rate of growth, the firm retains all its earnings to help defray the cost of new investments.

The firm's balance sheet for 2015 is shown in the following table:

Liftman Industries Inc.

BALANCE SHEET

 

12/31/2015

% OF SALES

Current assets

$ 2.000,000

17%

Net fixed assets

8.000.000

67%

Total

$ 10.000.000

 

LIABILITIES AND OWNERS' EQUITY

Accounts payable

$ 3.000,000

25%

Long-term debt

2.000.000

NA'

Total liabilities

$ 5.000.000

 

Common stock

1,000.000

NA

Paid-in capital

1,800,000

NA

Retained earnings

1,200.000

 

Common equity

4.000.000

 

Total

$10.000.000

 

Estimate Brigman's financing requirements (that is, total assets) for 2016 and its discretionary financing needs (DFN).

Reference no: EM132354711

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