KIN356ProblemSet6

# KIN356ProblemSet6 - SEP OCT NOV DEC Cash Flow 1200 6800...

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

Griffin Warner Problem Set Six 1.) Net assets = Assets – liabilities NA = .5 (120000) = 600,000 Return on Sales = 1,200,000 (0.08) = 96,000 Asset buildup = Sales increase (.5) = 600,000 (.5) = 300,000 Bank acct 120000 Sales 600000 1200000 NA 300000 600000 Sales Return 96000 Asset Buildup -300000 Beginning cash – asset buildup + profit 120,000 – 300,000 = -180,000 + 96,000 = \$-84,000 So, no his optimistic outlook for his cash position does NOT appear to be correct. 2.) Last year’s sales = 200 units (\$160) = \$32,000 This year’s sales = 250 units (\$176) = \$44,000 Returned merch = total sales (.05) = \$44,000 (.05) = \$2,200 Net dollar sales projection = 44,000 – 2,200 = \$41,800 The net dollar sales projection for this year would be \$41,800 3.) Net Cash flow = sales (.2) Next month Credit returns = sales (.4) Two-month credit returns = sales (.6) Cash Receipts Schedule SEP OCT NOV DEC Sales 6000 10000 16000 12000 Cur. Coll.20% 1200 2000 3200 2400 Prev. Coll. 4800 8000 12800 Cash Receipts 6800 11200 15200 Cash budget w/borrowing and repayment provisions

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.

Unformatted text preview: SEP OCT NOV DEC Cash Flow 1200 6800 11200 15200 Beg. Balance 5000 6200 5000 3200 Cum. Balance 6200 13000 16200 18400 Monthly loan-8000-13000-6000 Cum. Loan End Balance 6200 5000 3200 12400 4.) Sales (profit margin) = \$200M (.12) = \$24M in profit Divident payout = \$200M (.4) = \$80M Sales increase = \$200M (.15) = \$30M + \$200M = \$230M Next year’s profit = \$230M (.12) = \$27.6M a.) Profits – dividends = \$27.6M - \$92M = \$(64.4)M The (64.4M) resulting from the large amount of dividends compared to profit means that external financing will be required for the company during the coming year. b.) If profits = 14% and dividends = 70% Profits – dividends = 32.2M - 161M = \$(128.8) M Even with profits increasing, dividends to be paid increased by such a large amount that JumpCampanelli’s would need to finance \$128.8M externally in order to keep paying it’s extremely high dividends....
View Full Document

{[ snackBarMessage ]}

### Page1 / 2

KIN356ProblemSet6 - SEP OCT NOV DEC Cash Flow 1200 6800...

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

View Full Document
Ask a homework question - tutors are online