Reference no: EM131133174
Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton's balance sheet as of December 31, 2013, is shown here (millions of dollars):
| Cash |
$ 3.5 |
|
Accounts payable |
$ 9.0 |
| Receivables |
26.0 |
|
Notes payable |
18.0 |
| Inventories |
58.0 |
|
Line of credit |
0 |
| Total current assets |
$ 87.5 |
|
Accruals |
8.5 |
| Net fixed assets |
35.0 |
|
Total current liabilities |
$ 35.5 |
|
|
|
Mortgage loan |
6.0 |
|
|
|
Common stock |
15.0 |
|
|
|
Retained earnings |
66.0 |
| Total assets |
$122.5 |
|
Total liabilities and equity |
$122.5 |
Sales for 2013 were $425 million and net income for the year was $12.75 million, so the firm's profit margin was 3.0%. Upton paid dividends of $5.1 million to common stockholders, so its payout ratio was 40%. Its tax rate is 40%, and it operated at full capacity. Assume that all assets/sales ratios, spontaneous liabilities/sales ratios, the profit margin, and the payout ratio remain constant in 2014. Do not round intermediate calculations.
If sales are projected to increase by $70 million, or 16.47%, during 2014, use the AFN equation to determine Upton's projected external capital requirements. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
Use the forecasted financial statement method to forecast Upton's balance sheet for December 31, 2014. Assume that all additional external capital is raised as a line of credit at the end of the year and is reflected (because the debt is added at the end of the year, there will be no additional interest expense due to the new debt). Assume Upton's profit margin and dividend payout ratio will be the same in 2014 as they were in 2013. What is the amount of the line of credit reported on the 2014 forecasted balance sheets? (Hint: You don't need to forecast the income statements because you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2014 addition to retained earnings for the balance sheet.) Round your answers to the nearest cent.Upton Computers
Pro Forma Balance Sheet
December 31, 2014
(Millions of Dollars)
Cash $ Receivables $ Inventories $ Total current assets $ Net fixed assets $ Total assets $ Accounts payable $ Notes payable $ Accruals $ Total current liabilities $ Mortgage loan $ Common stock $ Retained earnings $ Total liabilities and equity
$ _____________ million
Using the AFN equation, determine Upton's self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? Round your answer to two decimal places.
________________%
|
Did this affect the output from the baseline regression
: What is the impact of the variable you added? Is it statistically significant? Explain your answer in a sentence or two. Did this affect the output from the "baseline" regression
|
|
Explain political military economic or social impact
: You may choose from political, military, economic, or social impact. Your choice should include setting, timeline, major figures, catalysts, outcomes, and statistics.
|
|
What is the extent of child abuse and neglect
: How do the various types of child abuse and neglect differ? How are these types viewed from different theoretical perspectives? What are implications of child abuse and neglect?
|
|
Tower industries expects to pay a dividend
: Tower Industries expects to pay a dividend of $2.40 at the end of year 1. Dividends will grow by 25% each year until year 4. After year 4, the firm expects a constant growth rate of 5%. If investors require 12%, what is the current share price?
|
|
Upton computers makes bulk purchases of small computers
: Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton's balance sheet ..
|
|
Explain the debate surrounding abolition vs equality
: Introduce the debate surrounding abolition vs. equality and how it led to the American Civil War. Why were there significant fears about the impact of freed slaves in the North? Who had the most to win/lose?
|
|
Features of the enlightenment
: What were the main features of the enlightenment thought and how did it present a threat to the old order? Give examples of the black and women's enlightenment.
|
|
What is your decision regarding the null hypothesis why
: An automated assembly line is set to fill a small bottle with 9.0 grams of cough syrup. What is your decision regarding the null hypothesis? Why
|
|
What kind of people is democracy suitable form of government
: According to Fitzhugh, for what kinds of people is democracy a suitable form of government? How do those types of slavery differ from Southern slavery? And, according to Fitzhugh, why is Southern slavery better?
|