Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount fter taxes. The firm is currently in the process of projecting its financing needs and has made the following ssumptions (projections): 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends. 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long- erm debt outstanding. Vhat are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the oming vear?

Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount fter taxes. The firm is currently in the process of projecting its financing needs and has made the following ssumptions (projections): 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends. 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long- erm debt outstanding. Vhat are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the oming vear?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

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