carter corp - the forecasted retention ration is 30%. Use...

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Carter Corp's sales are expected to increase from $5 million n 2008 to $6 million in 2009 or by 20%. Its assets totaled $3 million at the end of 2008. Carter is at full capacity so its assets must grow in proportion to projected sales. At the end of 2008 current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable and $250,000 of accrued liabilities. The after-tax profit margin is forecasted to be 5% and
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Unformatted text preview: the forecasted retention ration is 30%. Use the AFN equation to forecast Carter's additional funds needed for the coming year. AFN = (A*/S ) S (L*/S ) S MS 1 (RR) = $5,000,000 $3,000,000 $1,000,000 $5,000,000 $500,000 $1,000,000 0.05($6,000,000)(0.3) = (0.6)($1,000,000) (0.1)($1,000,000) ($300,000)(0.3) = $600,000 $100,000 $90,000 = $410,000....
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This note was uploaded on 01/25/2012 for the course ACC 101\ taught by Professor Sirbondoc during the Spring '11 term at Ateneo de Manila University.

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