Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 9, Problem 2MC
Summary Introduction
Case summary:
Company H is a medical supplies company. Its stock price had been lagging its industry averages. So board of directors has decided to appoint person L is a CEO and asked him to develop the financial planning and strategic plans and
She always compares financial ratios of Company H with industry averages. If any ratio is substandard she discussed immediately with the responsible manager and needs to improve the situations.
To determine: New external capital of Company H in the year 2019 by using AFN equation.
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Students have asked these similar questions
Use the AFN equation to estimate Hatfield’s required new external capital for 2020 if the sales growth rate is 11.1%. Assume that the firm’s 2019 ratios will remain the same in 2020. (Hint: Hatfield was operating at full capacity in 2019.)
The following relates to financial projections of ABC Co. for 2019: Suppose that, in 2024, ABC’s sales are expected to increase by 15%. By what percentage is the operating income expected to increase?
13. Using Percentage of Sales. The 2019 financial statements for Growth Industries are presented
below. Sales and costs are projected to grow at 20% a year for at least the next 4 years.
Both current assets and accounts payable are projected to rise in proportion to sales. The firm
is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales.
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Industries similar to the one in Spreadsheet 18.1. (LO18-2)
INCOME STATEMENT, 2019
Sales
$200,000
Costs
150,000
$ 50,000
EBIT
Interest expense
10,000
Taxable income
$ 40,000
Taxes (at 21%)
8,400
Net income
$ 31,600
$12,640
$18,960
Dividends
Addition to retained earnings
BALANCE SHEET, YEAR-END, 2019
Assets
Liabilities
Current assets
Current liabilities
$ 3,000
$ 10,000
$ 10,000
Cash
Accounts payable
Accounts receivable
8,000…
Chapter 9 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 9 - Define each of the following terms:
Operating...Ch. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Broussard Skateboard’s sales are expected to...Ch. 9 - AFN Equation Refer to Problem 9-1. What would be...Ch. 9 - AFN Equation Refer to Problem 9-1. Return to the...Ch. 9 - Sales Increase Maggies Muffins Bakery generated 5...
Ch. 9 - Long-Term Financing Needed At year-end 2018,...Ch. 9 - Additional Funds Needed
The Booth Company’s sales...Ch. 9 - Forecasted Statements and Ratios Upton Computers...Ch. 9 - Financing Deficit
Stevens Textile Corporation’s...Ch. 9 - Prob. 9PCh. 9 - Hatfield Medical Supplys stock price had been...Ch. 9 - Prob. 2MCCh. 9 - Define the term capital intensity. Explain how a...
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