2. More on the AFN (Additional Funds Needed) equation Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet: Total assets: Accounts payable: Notes payable: Accrued liabilities: Based on the AFN equation, the firm's AFN for the current year is $425,000 $75,000 $25,000 $60,000 A positively signed AFN value represents: OA shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth. 71.2% oint at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales uirements. 62.3% 80.1% urplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. 89.0% Bec excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay of its earnings to shareholders without needing to raise any external capital.(Hint: What can Green Moose increase its dividend payout ratio to before the AFN becomes positive?) out
2. More on the AFN (Additional Funds Needed) equation Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet: Total assets: Accounts payable: Notes payable: Accrued liabilities: Based on the AFN equation, the firm's AFN for the current year is $425,000 $75,000 $25,000 $60,000 A positively signed AFN value represents: OA shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth. 71.2% oint at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales uirements. 62.3% 80.1% urplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. 89.0% Bec excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay of its earnings to shareholders without needing to raise any external capital.(Hint: What can Green Moose increase its dividend payout ratio to before the AFN becomes positive?) out
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Please help with practice problems and the answers are one those numbers in the picture
Transcribed Image Text:2. More on the AFN (Additional Funds Needed) equation
Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to
maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet:
Total assets:
Accounts payable:
Notes payable:
Accrued liabilities:
Based on the AFN equation, the firm's AFN for the current year is
$425,000
$75,000
$25,000
$60,000
A positively signed AFN value represents:
Bec
out
O A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth.
71.2% oint at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales
62.3% uirements.
80.1% urplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends.
89.0%
excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay
of its earnings to shareholders without needing to raise any external capital.(Hint: What can Green Moose increase its dividend
payout ratio to before the AFN becomes positive?)
Transcribed Image Text:2. More on the AFN (Additional Funds Needed) equation
Green Moose Industries reported sales of $743,000 at the end of last year, but this year, sales are expected to grow by 6%. Green Moose expects to
maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Green Moose's balance sheet:
Total assets:
Accounts payable:
Notes payable:
Accrued liabilities:
$425,000
$75,000
$25,000
$60,000
Based on the AFN equation, the firm's AFN for the current year is
A positively signed AFN value represents:
-$120,719
-$88,218
O A shortage of internally generated funds that must be r
O A point at which the funds generated within the firm eq
requirements.
O A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends.
-$92,861
the company to finance the company's forecasted future growth.
hds for funds to finance the firm's future expected sales
-$102,147
Because of its excess funds, Green Moose Industries is thinking about raising its dividend payout ratio to satisfy shareholders. Green Moose could pay
out
of its earnings to shareholders without needing to raise any external capital. (Hint: What can Green Moose increase its dividend
payout ratio to before the AFN becomes positive?)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education