farl File Edit View History Bookmarks Window Help Ch. 12: HW2 Attempts: Score: 13 3. More on the AFN (Additional Funds Needed) equation A Aa Green Caterpilar Garden Supplies Inc. reported sales of $890,00 at the end of last year, but this year, sales are expected to grow by 10%. Green Caterpillar expects to maintain its urrent profit margin of 22% and dividend payout ratio of 10%. The following information was taken from Green Caterpillar's balance sheet Total assets: Accounts payable: Notes payable Accrued liabilities: $450,000 $75,000 $30,000 $75,000 Based on the AFN equation, the firm's AFN for the current year is 196,610 -$180,226 -$172,034 $163,842 A positively signed AFN value represents: O A point at which the funds generated within the firm equal the demands for funds to finance the firm's future O A surplus of internally generated funds that can be invested in physical or financial assets or paid out as O A shortage of internally generated funds that must be raised outside the company to finance the company's expected sales requirements additional dividends forecasted future growth Because of its excess funds, Green Caterpillar Garden Supplies Inc. is thinking about raising its dividend payout ratio to satisty shareholders. Green Caterpilar could pay out of its earnings to shareholders without needing to raise any external capital. (Hint: What can Green Caterpitar increase its dividend payout ratio to before the AFN becomes positive?)