How would the following items impact AFN, holding everything else constant: capital intensity, growth rate, increase in A/P, profit margin, payout ratio?

Additional Funds Needed (AFN) Method =

required increase in assets - increase in spontaneous liabilities - increase in retained earnings

AFN = (A0*/S0) S - (L0*/S0) S - S1 * M * (1 - POR)

AFN = (A0*/S0)(gS0) - (L0*/S0)(gS0) - (1+g)S0 * M * (1 - POR)

S0 = last years sales = 2,000

g = forecasted growth rate in sales = 0.15

gS0 = change in sales (S1 - S2 = S) = 300

A0* = assets that must increase to support the increase in sales

A0*/S0 = required assets per dollar of sales= 0.6

L0 = last years spontaneous assets (ex. payables + accruals)

L0*/S0 = spontaneou liabilities per dollar of sales = 0.05

M = profit margin (net income/sales) = 0.012

POR = payout ratio (last years dividends/net income) = % of income paid out = 0.375

Therefore,

AFN = (A0*/S0)(gS0) - (L0*/S0)(gS0) - (1+g)S0 * M * (1 - POR)

AFN = (0.6)(300) - (0.05)(300) - (1+0.15)(2,000) * 0.012 * (1 - 0.375)

AFN = 180 - 15 - (1.15*2,000) * 0.012 * 0.625

AFN = 165 - 2300 * 0.0075

AFN = 165 - 17.25

KD AFN = 147.75

KDs estimated AFN for required external capital for 2013 if the expected 15% growth rate takes place is 147.75.