Lindseys total financing needs for the upcoming year

Assignment Help Financial Management

Reference no: EM131185734

Lindsey Insurance Co. has current sales of $10 million and predicts next year’s sales will grow to $14 million. Current assets are $3 million and fixed assets are $4 million. The firm’s net profit margin is 7 percent after taxes. Presently, Lindsey has $900,000 in accounts payable, $1.1 million in long-term debt, and $5 million (including $2.5 million in retained earnings) in common equity. Next year, Lindsey projects that current assets will rise in direct proportion to the forecasted sales, and that fixed assets will rise by $500,000. Lindsey also plans to pay dividends of $400,000 to common shareholders.

a) What are Lindsey's total financing needs for the upcoming year?

b) Given the information above, what are Lindsey's discretionary financing needs?

Please explain and show the math

Reference no: EM131185734

Questions Cloud

Job description and job specification of a storekeeper : Write down the job analysis, job description and job specification of a storekeeper's job. (2) What specific standards and specification would you include in the job description and job specification.

Example of bad organizational culture : The recall at GM motors which happened under mary Bara has often been cited as the classic example of bad organizational culture, please explain.

Increase or decrease bonds yield to maturity : Indicate whether each of the following actions will increase or decrease a bond`s yield to maturity:

Problem regarding the keeping momentum : One of the biggest challenges for leaders is to keep momentum going while implementing change. Particularly when the culture of an organization is strong, it can be quite difficult to fully implement the change before the momentum disappears. Sust..

Lindseys total financing needs for the upcoming year : Lindsey Insurance Co. has current sales of $10 million and predicts next year’s sales will grow to $14 million. Current assets are $3 million and fixed assets are $4 million. The firm’s net profit margin is 7 percent after taxes. What are Lindsey's t..

What should be the primary objective of managers : What is the weighted average cost of capital? How do free cash flows and the weighted average cost of capital interact to determine a firm's value? What should be the primary objective of managers?

Quantitative approach to management : Why do most modern organization use quantitative approach to management when undertaking their managerial issues?

Value-based leadership in healthcare organizations : Establishing value-based leadership in healthcare organizations. I have an outline and would like another opinion.

Difference between espoused and actual reality : What is the difference between espoused and actual reality. And why do organization find it difficult to assess themselves honestly?

User Account

All Pages