Ch 5 Supplemental Problems

Ch 5 Supplemental Problems - CHAPTER 5 SUPPLEMENTAL...

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CHAPTER 5 SUPPLEMENTAL PROBLEMS 5- 1. Franklin Enterprises is evaluating its financing requirements for 2009. The firm has only been in business for one year, but its CFO predicts the firm’s operating expenses, current assets and net fixed assets will remain at their current proportions of sales. Spontaneous liabilities will vary as a percentage of sales. Last year, Franklin Enterprises had $12 million in sales with net income of $1.2 million. The firm anticipates that 2009’s sales will reach $15 million with net income rising to $2 million. Given its present high rate of growth, the firm will retain all of its earnings to help defray the cost of new investments. The firm’s most recent balance sheet follows. 12/31/2008 2009 % of Sales Sales $12,000,000 Net Income 1,200,000 Current Assets 3,000,000 25% Net fixed assets 6,000,000 50% Total $ 9,000,000 Liabilities and Owner’s Equity Accounts payable $2,000,000 Accrued expenses $1,000,000 Long-term debt 2,000,000 Total Liabilities
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Ch 5 Supplemental Problems - CHAPTER 5 SUPPLEMENTAL...

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