# Ch003 - Chapter 3 Financial Planning and Growth 3.1 From...

This preview shows pages 1–2. Sign up to view the full content.

Chapter 3: Financial Planning and Growth 3.1 From the relationship, S = .00001 x GNP, we can get forecast sales: S = 0.00001; GNP = 0.00001 (\$2,050 trillion) = \$20,500,000 Now, compute the other values: Projected Current Assets = Current Assets + Current Assets: CA = \$500,000 + 0.25 (\$20,500,000) = \$5,625,000 Similar for rest: FA = \$1,000,000 + 0.50 (\$20,500,000) = \$11,250,000 CL = \$100,000 + 0.10 (\$20,500,000) = \$2,150,000 and: NP = 0.02 (\$20,500,000) = \$410,000 Compute the new amount of retained earnings: RE = NP ( 1 - dvd payout ratio) = NP (1 - 0.34) = \$410,000 (0.66) = \$270,600 RE = \$3,400,000 + \$270,600 = \$3,670,600 Compute the new amount of bonds: Debt-to-Asset Ratio = Total Debt / Total Assets = (\$1,100,000 + \$2,500,000) / (\$3,000,000 + \$6,000,000) = 0.40 Bonds = [ Total Assets x Debt/Asset ratio ] - Current Liabilities = [(CA + FA) x 0.40] - CL = (\$5,625,000 + \$11,250,000) (0.40) - \$2,150,000 = \$4,600,000 Compute the new amount of stock: Use: Total Assets Total Liabilities + Total Equity, then Stock = [(CA + FA) - (CL + Bonds + RE)] = (\$5,625,000 + \$11,250,000) - (\$2,150,000 + 4,600,000 + 3,670,600) = \$6,454,400 And now we can use the above to fill in the Balance Sheet:

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 4

Ch003 - Chapter 3 Financial Planning and Growth 3.1 From...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online