Use the afn formula to forecast baxter additional funds

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Reference no: EM1390928

Q. AFN Formula Baxter Video Products' sales are expected to increase by 20% from $ 5 million in 2009 to $ 6 million in 2010. Its assets totalled $ 3 million at the end of 2009. Baxter is at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2009, current liabilities were $ 1 million, consisting of $ 250,000 of accounts payable, $ 500,000 of notes payable and $ 250,000 of accruals. The after-tax profit margin is forecasted to be 5% and the forecasted payout ratio is 70%. Use the AFN formula to forecast Baxter's additional funds needed for the coming year.

Reference no: EM1390928

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