How much new long-term debt financing will be needed

Assignment Help Financial Management

Reference no: EM131967779

At year-end 2016, total assets for Arrington Inc. were $2 million and accounts payable were $355,000. Sales, which in 2016 were $2.4 million, are expected to increase by 30% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Arrington typically uses no current liabilities other than accounts payable. Common stock amounted to $475,000 in 2016, and retained earnings were $215,000. Arrington plans to sell new common stock in the amount of $170,000. The firm's profit margin on sales is 7%; 70% of earnings will be retained.

What were Arrington's total liabilities in 2016? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest cent. $

How much new long-term debt financing will be needed in 2017? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round your intermediate calculations. Round your answer to the nearest cent. (Hint: AFN - New stock = New long-term debt.)

Reference no: EM131967779

Questions Cloud

How the resource-based view of firm combines two perspective : Discuss how the resource-based view (RBV) of the firm combines the two perspectives of (1) an internal analysis of a firm and (2) an external analysis.

What will the new weighted average cost of capital be : Land Rover Corp. is currently an all equity firm worth $100M. Land Rover's cost of equity is currently 14% and its tax rate is 30%.

Find major differences between the film and the musical : Find ten major differences between the film and the musical. Once you have identified them, offer reasons the playwright may have made these changes.

Prepare balance sheet just after it gets the bank loan : Lanni uses the cash from the bank plus $20,000 of its own funds to finance the development of new financial planning software.

How much new long-term debt financing will be needed : What were Arrington's total liabilities in 2016? How much new long-term debt financing will be needed in 2017?

What is the overall greatest threat to biodiversity : What is the overall greatest threat to biodiversity? Biodiversity varies depending on location. Which of the following places has the greatest biodiversity?

Use m-m proposition i to find the price per share of equity : Use M&M Proposition I to find the price per share of equity. What is the value of the firm under Plan I?

Discuss investor required rate of return : Discuss investor's required rate of return, and how the riskiness of an asset is measured and interpreted. Assess how diversifying investments would affect.

Company achieve without having to raise funds : How large of a sales increase can the company achieve without having to raise funds externally?

User Account

All Pages