Problem 12-02
AFN equation
Broussard Skateboard's sales are expected to increase by 25%from $8.2 million in 2016 to $10.25 million in 2017. Its assetstotaled $5 million at the end of 2016. Broussard is already at fullcapacity, so its assets must grow at the same rate as projectedsales. At the end of 2016, current liabilities were $1.4 million,consisting of $450,000 of accounts payable, $500,000 of notespayable, and $450,000 of accruals. The after-tax profit margin isforecasted to be 5%, and the forecasted payout ratio is 60%. Whatwould be the additional funds needed? Do not round intermediatecalculations. Round your answer to the nearest dollar.
$______
Assume that an otherwise identical firm had $6 million in totalassets at the end of 2016. The identical firm's capital intensityratio (A0*/S0) is
Select (only one)-
higher than, lower than, or equal to
Item 2 than Broussard's; therefore, the identical firm is
Select (only one)-
less, more, or the same
Item 3 capital intensive - it would require
Select (only one)-
a smaller, a larger, or the same
Item 4 increase in total assets to support the increase insales.
