Question

Using Global Manufacturing’s financial statements in problem 12, estimate their external financing needs if 10-percent growth in sales is expected and the firm pays out half of its earnings as dividends.
1. Forecast the dollar amount of expected sales increase
2. Determine the dollar amount of new asset investments necessary to support the sales increase.
3. Subtract the expected amount of retained profits from the planned asset investments.
4. Subtract the amount of spontaneous increases expected in accounts payable and accrued liabilities from the planned asset investments.
5. The remaining dollar amount of asset investments determines the external financing needs (EFN).


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  • CreatedMarch 27, 2015
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