A firm has the following balance sheet: Cash P10,000,000 Accounts receivable 10,000,000 Inventories 10,000,000 Fixed assets 90,000,000
Question:
A firm has the following balance sheet:
Cash P10,000,000
Accounts receivable 10,000,000
Inventories 10,000,000
Fixed assets 90,000,000
Total assets P120,000,000
Accounts payable P10,000,000
Notes payable 20,000,000
Long-term debt 40,000,000
Common stock 40,000,000
Retained earnings 10,000,000
Total liabilities and equity P120,000,000
Fixed assets are being used at 80 percent of capacity; sales for the year just ended were P200M; sales will increase P10M per year for the next 4 years; the profit margin is 5 percent; and the dividend payout ratio is 60 percent. Assume that underutilized fixed assets cannot be sold. What are the total external financing requirements for the entire 4 years, that is, the total AFN for the 4-year period?
Group of answer choices
-P 0.80 (surplus)
P 4.00
-P14.00 (surplus)
P 2.00
