Question: I need help with questions 1 & 2. Can you show me how to do them using excel 17-1 AFN EQUATION Carlsbad Corporation's sales are

 I need help with questions 1 & 2. Can you show
I need help with questions 1 & 2. Can you show me how to do them using excel

17-1 AFN EQUATION Carlsbad Corporation's sales are expected to increase from $5 million in 2018 to $6 million in 2019, or by 20%. Its assets totaled $3 million at the end of 2018. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2018, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%, and the forecasted retention ratio is 30%. Use the AFN equation to forecast the additional funds Carlsbad will need for the coming year. AFN EQUATION Refer to problem 17-1. What additional funds would be needed if the company's year-end 2018 assets had been $4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in problem 17-1? Is the com- pany's "capital intensity" the same or different? Explain 17-2

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!