Broussard Skateboard's sales are expected to increase by 15% from $8.4 million in 2016 to $9.66 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 60%.
What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar.
It is the statement prepared for the period to determine the income earned over the period. It includes every business-related revenue and expense for the period.
To find out the net income total expense is deducted from the total revenue.
Answer and Explanation:
The additional fund needed is $1.2348 million.
Need of additional fund has been computed by deducting after-tax profit and adding...
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from Corporate Finance: Help & ReviewChapter 2 / Lesson 6