Use the fan equation to forecast the additional funds

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Reference no: EM131872022

AFN Equation Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $3 million at the end of 2016. Carlbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilites are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%, and the forecasted retention ratio is 30%. Use the FAN equation to forecast the additional funds Carlsbad will need for the coming year. Show Work ; not Excel.

Reference no: EM131872022

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