Problem 4-27 (Algo) Percent-of-sales method [LO4-3]Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balancesheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (includingfixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.CashAccounts receivable.InventoryCurrent assetsAssetsFixed assetsBalance Sheet (in 5 millions).Liabilities and Stockholders' Equity$5 Accounts payablet2326$ 5443Accrued wagesAccrued taxes.Current liabilitiesNotes payableCommon stockRetained earnings.$97 Total liabilities and stockholders equityAnswer is complete but not entirely correct.New funds21$18511$34131832$ 97Total assetsOwen's Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 30 percent.If sales grow by 15 percent next year, determine how many dollars of new funds are needed to finance the growth.Note: Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).

STEP 1By taking into account the expenses associated with creating and selling products, profit…

Answered: Owen's Electronics has nine operating…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 10P

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2.[EXCEL] Cash conversion cycle: Northern Manufacturing Company management found that during the last year it took an average of 47 days to pay its suppliers, whereas it took 63 days to collect its receivables. The company's days' sales in inventory was 49 days. What was Northern's cash conversion cycle?
Problem 4-27 (Algo) Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable Inventory Current assets Fixed assets Assets Total assets New funds $ Balance Sheet (in $ millions) 18 $10 22 27 $59 47 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes Current liabilities $106 Owen's Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 50 percent. If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth. Note: Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g.,…
Problem 4-27 (Algo) Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable Inventory Current assets. Fixed assets Total assets Assets New funds at I can't message you ahead of time because of 1 Balance Sheet (in $ millions) 2 $ 11 28 29 $ 68 46 OCT $ 114 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes Owen's Electronics has an aftertax profit margin of 10 percent and a dividend payout ratio of 50 percent. If sales grow by 30 percent next year, determine how many dollars of new funds are needed to finance the growth. Note: Do not round intermediate calculations. Enter your answer…
[EXCEL] Investment cash flows: Keswick Supply Company wants to set up a division that provides copy and fax services to businesses. Customers will be given 20 days to pay for such services. The annual revenue of the division is estimated to be $25,000. Assuming that the customers take the full 20 days to pay, what is the incremental cash flow associated with accounts receivable? Please use excel.
[EXCEL] Payback: Quebec, Inc., is purchasing machinery at a cost of $3,768,966. The company's management expects the machinery to produce cash flows of $979,225, $1,158,886, and $1,881,497 over the next three years, respectively. What is the payback period? please use excel
S Problem 4-28 (Algo) Percent-of-sales method [LO4-3] The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm is expecting a 35 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales. Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends Fixed assets Income Statement Cash Accounts receivable Inventory Current assets Total assets The firm Assets needs $ 220,000 171,200 $ 48,800 8,300 $ 40,500 16,300 $ 24,200 $ 7,260 Balance Sheet (in $ millions) $ 110,000 93,000 $8,000 Accounts payable 33,000 Accrued wages 69,000 Accrued taxes Liabilities and Stockholders' Equity…
CHAPTER 10: FINANCIAL FORECASTING AND PLANNING QUESTION AND ANSWER ST-1. (Financial forecasting) Use the percent of sales method to prepare a pro forma income statement for Calico Sales Co. Inc. Projected sales for next year equal $4 million. Cost of goods sold equals 70 percent of sales, administrative expense equals $500,000, and depreciation expense is $300,000. Interest expense equals $50,000, and income is taxed at a rate of 40 percent. The firm plans to spend $200,000 during the period to renovate its office facility and will retire $150,000 in notes payable. Finally, selling expense equals 5 percent of sales.
Problem 4-28 (Algo) Percent-of-sales method [LO4-3] The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm is expecting a 30 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales. Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends Income Statement Fixed assets Cash Accounts receivable Inventory Current assets Total assets Assets The firm $ 250,000 184,800 $ 65,200 8,600 $ 56,600 16,600 $ 40,000 $ 16,000 Balance Sheet (in $ millions) $ 125,000 96,000 Liabilities and Stockholders' Equity $4,000 Accounts payable 53,000 Accrued wages 68,000 Accrued taxes Current…
[EXCEL] Payback: Nakamichi Bancorp has made an investment in banking software at a cost of $1,875,000. Management expects productivity gains and cost savings over the next several years. If, as a result of this investment, the firm is expected to generate additional cash flows of $586,212, $713,277, $431,199, and $318,697 over the next four years, what is the investment's payback period?
Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Stricklers sales last year were 3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was 1,800,000. The firm had fixed assets totaling 535,000. Stricklers payables deferral period is 45 days. a. Calculate Stricklers cash conversion cycle. b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. c. Suppose Stricklers managers believe the annual inventory turnover can be raised to 9 times without affecting sale or profit margins. What would Stricklers cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?
AFN Equation Refer to Problem 9-1. What would be the additional funds needed if the companys year-end 2018 assets had been 7 million? Assume that all other numbers, including sales, are the same as in Problem 9-1 and that the company is operating at full capacity. Why is this AFN different from the one you found in Problem 9-1? Is the companys capital intensity ratio the same or different?

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