Question: The McGill Company s sales are forecasted to increase from 1 000

The McGill Company’s sales are forecasted to increase from $1,000 in 2015 to $2,000 in 2016. Following is the December 31, 2015, balance sheet:

McGill’s fixed assets were used to only 50 percent of capacity during 2015, but its current assets were maintained at their appropriate levels. All assets except fixed assets increase at the same rate as sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. McGill’s after-tax profit margin is forecasted to be 5 percent and its dividend payout ratio (percent of earnings paid as dividends) will be 60 percent. What is McGill’s AFN for the coming year? Ignore financing feedbackeffects.
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  • CreatedNovember 24, 2014
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