Problem Set 3 - Problem Set 2 Mariea Pack-Elder Chapter 12...

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Problem Set 2 Mariea Pack-ElderJune 29, 2016
Chapter 12: Problem 12-2Refer to Problem 12-1. What would be the additional funds needed if the company’ s yearend 2013 assets had been $7 million? Assume that all other numbers, including sales,are the same as in Problem 12-1 and that the company is operating at full capacity. Why is this AFN different from the one you found in Problem 12-1? Is the company’ s “capital intensity” ratio the same or different?Chapter 12: Problem 12-4Sales Increase Maggie's Muffins, Inc., generated $5,000,000 in sales during 2013, and itsyear-end total assets were $2,500,000. Also, at year-end 2013, current liabilities were$1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and$200,000 of accruals. Looking ahead to 2014, the company estimates that its assets mustincrease at the same rate as sales, its spontaneous liabilities will increase at the same rateas sales, its profit margin will be 7%, and its payout ratio will be 80%. How large a salesincrease can the company achieve without having to raise funds externally: that is, whatis its self-supporting growth rate?∆S = $202,312

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