Using Global Manufacturings financial statements in problem 12, estimate their external financing needs if 10-percent growth in
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).
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Step by Step Answer:
The percentageofsales balance sheet appears next 2015 2014 2013 2015 2014 2013 Average ASSETS Cash and marketable securities 25000 20000 16000 36 33 3...View the full answer
Introduction to Finance Markets Investments and Financial Management
ISBN: 978-1118492673
15th edition
Authors: Melicher Ronald, Norton Edgar
