by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to
Last year’s sales P300.0 Last year’s accounts payable P40.0
Sales growth rate 15% Last year’s notes payable P10.0
Last year’s total assets P500.0 Last year’s accruals P20.0
Last year’s profit margin 15.0% Initial retention ratio 90.0%
What would the company’s capital intensity ratio be if the company changed the retention ratio to the new level?
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