Corporate Finance

Question 1 :

AFN Equation

Broussard Skateboard's sales are expected to acception by 15% from $7.8 darling in 2019 to $8.97 darling in 2020. Its proceeds totaled $2 darling at the end of 2019.

Broussard is already at generous compatability, so its proceeds must extend at the corresponding trounce as contemplated sales. At the end of 2019, running liabilities were $1.4 darling, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax emolument edge is meeted to be 4%, and the meeted payout kindred is 75%. Use the AFN equation to meet Broussard's appended funds wanted for the future year. Enter your counter-argument in dollars. For copy, an counter-argument of $1.2 darling should be entered as $1,200,000. Do not entire interposed calculations. Entire your counter-argument to the right dollar.


Question 2 :

Upton Computers makes volume purchases of insignificant computers, supplys them in conveniently located warehouses, ships them to its fastening of retail stores, and has a staff to admonish customers and aid them set up their new computers. Upton's et equivocation as of December 31, 2019, is shown short (millions of dollars):

Cash$   3.5 Accounts payable$   9.0
Receivables26.0 Notes payable18.0
Inventories58.0 Line of merit0
 Total running proceeds$ 87.5 Accruals8.5
Net unroving proceeds35.0  Total running liabilities$ 35.5
   Mortgage loan6.0
   Common supply15.0
   Retained rights66.0
 Total proceeds$122.5  Total liabilities and equity$122.5

Sales for 2019 were $475 darling and net proceeds for the year was $14.25 darling, so the secure's emolument edge was 3.0%. Upton remunerated dividends of $5.7 darling to low supplyholders, so its payout kindred was 40%. Its tax trounce was 25%, and it operated at generous compatability. Assume that all proceeds/sales kindreds, (unbidden liabilities)/sales kindreds, the emolument edge, and the payout kindred continue urban in 2020. Do not entire interposed calculations.

a. If sales are contemplated to acception by $85.5 darling, or 18%, during 2020, use the AFN equation to mention Upton's contemplated manifest chief requirements. Enter your counter-arguments in darlings. For copy, an counter-argument of $10,550,000 should be entered as 10.55. Entire your counter-argument to two decimal places.

$    million

b. Using the AFN equation, mention Upton's self-supporting extendth trounce. That is, what is the completion extendth trounce the secure can finish outside having to habituate nonunbidden manifest funds? Entire your counter-argument to two decimal places.


c. Use the meeted financial proposition way to meet Upton's et equivocation for December 31, 2020. Assume that all appended manifest chief is high as a way of merit at the end of the year and is reflected (accordingly the obligation is pretended at the end of the year, tshort acquire be no appended concern outlay due to the new obligation). Assume Upton's emolument edge and dividend payout kindred acquire be the corresponding in 2020 as they were in 2019. What is the totality of the way of merit reported on the 2020 meeted et equivocations? (Hint: You don't want to meet the proceeds propositions accordingly the way of merit is fascinated out on the latest day of the year and you are absorbed the contemplated sales, emolument edge, and dividend payout kindred; these figures toletrounce you to weigh the 2020 abstracted to retained rights for the et equivocation outside really constructing a generous proceeds proposition.) Enter your counter-arguments in darlings. For copy, an counter-argument of $10,550,000 should be entered as 10.55. Entire your counter-arguments to two decimal places.

Upton Computers Pro Forma Et Equivocation December 31, 2020 (Millions of Dollars)
 Total running proceeds$  
Net unroving proceeds$  
 Total proceeds$  
Accounts payable$  
Notes payable$  
Line of merit$  
  Total running liabilities$  
Mortgage loan$  
Common supply$  
Retained rights$  
  Total liabilities and equity$  

Question 3:

Financing Deficit Garlington Technologies Inc.'s 2019 financial propositions are shown below: Income Proposition for December 31, 2019 Sales $4,000,000 Operating costs 3,200,000  EBIT $  800,000 Concern 120,000  Pre-tax rights $  680,000 Taxes (25%) 170,000 Net proceeds 510,000 Dividends $  190,000 Balance Equivocation as of December 31, 2019 Cash $   160,000   Accounts payable $   360,000 Receivables 360,000   Way of merit 0 Inventories 720,000   Accruals 200,000  Total CA $1,240,000    Total CL $   560,000 Unroving proceeds 4,000,000   Long-term bonds 1,000,000  Total Proceeds $5,240,000   Low supply 1,100,000       RE 2,580,000        Total L&E $5,240,000 Suppose that in 2020 sales acception to $4.4 darling and that 2020 dividends acquire acception to $238,000. Meet the financial propositions using the meeted financial proposition way. Assume the secure operated at generous compatability in 2019. The long-term bonds accept an concern trounce of 12%. New financing acquire be after a while a way of merit. Assume it acquire be pretended at the end of the year. Cash does not acquire any concern proceeds. Enter your counter-arguments as enacted values. Do not entire interposed calculations. Entire your counter-arguments to the right dollar. Garlington Technologies Inc. Pro Forma Proceeds Proposition December 31, 2020 Sales   $   Operating costs   $   EBIT   $   Concern   $   Pre-tax rights   $   Taxes (25%)   $   Net proceeds   $   Dividends:   $   Abstracted to RE:   $   Garlington Technologies Inc. Pro Forma Et Proposition December 31, 2020 Cash   $   Receivables   $   Inventories   $    Total running proceeds   $   Unroving proceeds   $    Total proceeds   $   Accounts payable   $   Way of merit   $   Accruals   $    Total running liabilities   $   LT bonds   $   Low supply   $   Retained rights   $    Total L&E   $  
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