dad..2 Blue Elk Manufacturing reported sales of $775,000 at the end of last year;but this year, sales are expected to grow by 10% . Blue Elkexpects tomaintain its current profit margin of 23% and dividend payout ratio of15%. The firm's total assets equaled $400,000 and were operated at fullcapacity. Blue Elk's balance sheet shows the following current liabilities:accounts payable of $65, 000, notes payable of $25,000, and accruedliabilities of $75,000. Based on the AFN (Additional Funds Needed)equation, what is the firm's AFN for the coming year?

Additional funds needed (AFN) is the net amount that a business entity requires for funding for the…

Blue Elk Manufacturing reported sales of $775,000 at the end of last yea but this year, sales are expected to grow by 10%. Blue Elkexpects to maintain its current profit margin of 23% and dividend payout ratio of

Blue Elk Manufacturing reported sales of $775,000 at the end of last yea but this year, sales are expected to grow by 10%. Blue Elkexpects to maintain its current profit margin of 23% and dividend payout ratio of

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 12P: The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of...

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Blue Elk Manufacturing reported sales of $720,000 at the end of last year; but this year, sales are expected to grow by 6%. Blue Elk expects to maintain its current profit margin of 20% and dividend payout ratio of 20%. The firm’s total assets equaled $425,000 and were operated at full capacity. Blue Elk’s balance sheet shows the following current liabilities: accounts payable of $60,000, notes payable of $45,000, and accrued liabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm’s AFN for the coming year? Because of its excess funds, Blue Elk is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Blue Elk pay to shareholders without needing to raise any external capital? (Hint: What can Blue Elk increase its dividend payout ratio to before the AFN becomes positive?)
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