Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 3, Problem 8QAP
Summary Introduction
To compute: The amount of external financing required.
Introduction: The cash flow statement of any company represents the inflow and outflow of cash during the specified period. Along with the amount, it states the reason for the flow of cash.
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The most recent financial statements for Hornick, Inc., are shown below (assuming no income
taxes). Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid.
Next year's sales are projected to be $8,968. What is the external financing needed?
Income statement
$
$
Next year's sales $
Sales
Costs
Net income
7,600
5,180
2,420
Sales
Costs
Net income
8,968
Pro forma income statement
External financing
Assets $
Total $
Complete the following analysis. Do not hard code values in your calculations.
Percent increase in sales
Assets
Balance sheet
21,700 Debt
Equity
21,700 Total $
Total
$
Pro forma balance sheet
Debt
Equity
Total
9,100
12,600
21,700
▬▬▬▬
Use the following information to find the external financing needed (EFN):
Current sales: $6,000; Current costs: $3,000; Total Assets: $20,000; Total Debt: $8,000; Total equity: $12,000; Projected sales: $9,600. Total assets and costs are proportional to sales. The firm does not plan to distribute any dividends. The level of debt and equity is independent of the level of sales.
The most recent financial statements for Kerch, Incorporated, are shown here (assuming
no income taxes):
Income Statement
Sales
Costs
Net
income
$ 4,300
3,390
$910
Multiple Choice
$4,361
$4,491
Assets and costs are proportional to sales. Debt and equity are not. No dividends are
paid. Next year's sales are projected to be $5,972.
What is the external financing needed?
$4,241
$4,771
Assets
$4,616
Balance Sheet
$ 14,800 Debt
Equity
Total $14,800
$ 10,500
4,300
Total $14,800
Chapter 3 Solutions
Corporate Finance
Ch. 3 - Financial Ratio Analysis A financial ratio by...Ch. 3 - Industry-Specific Ratios So-called same-store...Ch. 3 - Sales Forecast Why do you think most long-term...Ch. 3 - Sustainable Growth In the chapter, we used...Ch. 3 - EFN and Growth Rate Broslofski Co. maintains a...Ch. 3 - Common-Size Financials One tool of financial...Ch. 3 - Asset Utilization and EFN One of the implicit...Ch. 3 - Comparing ROE and ROA Both ROA and ROE measure...Ch. 3 - Ratio Analysis Consider the ratio EBITD/Assets....Ch. 3 - Return on Investment A ratio that is becoming more...
Ch. 3 - Use the following information to answer the next...Ch. 3 - Prob. 12CQCh. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - DuPont Identity If Muenster, Inc., has an equity...Ch. 3 - Equity Multiplier and Return on Equity Synovec...Ch. 3 - Prob. 3QAPCh. 3 - EFN The most recent financial statements for...Ch. 3 - Prob. 5QAPCh. 3 - Sustainable Growth If the Moran Corp. has an ROE...Ch. 3 - Prob. 7QAPCh. 3 - Prob. 8QAPCh. 3 - Prob. 9QAPCh. 3 - Prob. 10QAPCh. 3 - Prob. 11QAPCh. 3 - Prob. 12QAPCh. 3 - External Funds Needed The Optical Scam Company has...Ch. 3 - Days' Sales in Receivables A company has net...Ch. 3 - Prob. 15QAPCh. 3 - Prob. 16QAPCh. 3 - Prob. 17QAPCh. 3 - Prob. 19QAPCh. 3 - Prob. 20QAPCh. 3 - Calculating EFN The most recent financial...Ch. 3 - Prob. 22QAPCh. 3 - Prob. 23QAPCh. 3 - Prob. 26QAPCh. 3 - Prob. 27QAPCh. 3 - Prob. 28QAPCh. 3 - Prob. 29QAPCh. 3 - Prob. 30QAPCh. 3 - Calculate all of the ratios listed in the industry...Ch. 3 - Prob. 2MCCh. 3 - Prob. 3MCCh. 3 - Prob. 4MCCh. 3 - Prob. 5MC
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