Forecast broussard additional funds

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Question 1: Broussard Skateboard sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled : $5 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2013, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard additional funds needed for the coming year.

Question 2: What would be the additional funds needed (AFN) if the companys year end assets had been $7 million? Assume all other numbers are the same as part 1.

Question 3: Return to the assumption that the year end assets for the company was $5 million but now assume that the company pays no dividends. Under these assumptions, what would the new AFN be?

Reference no: EM132459107

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