The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is...

Question

The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the December 31, 2019, balance sheet(see attached Excelsheet):

Cash	$100	Accounts payable	$50
Accounts receivable	200	Notes payable	150
Inventories	200	Accruals	50
Net fixed assets	500	Long-term debt	400
		Common stock	100
		Retained earnings	250
Total assets	$1,000	Total liabilities and equity	$1,000

Booth's fixed assets were used to only 50% of capacity during 2019, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecast to be 5% and its payout ratio to be 60%. What is Booth's additional funds needed (AFN) for the coming year?

week-6-prob-12-6-template-ze2thgld-hpythtt0.xlsx

Akshay Kumar · Accepted Answer

Sheet1
	BUS303-Business Finance
	Week 6/ Problem 12-6
	The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the December 31, 2019, balance sheet:
	Cash	$100	Accounts payable			$50
	Accounts receivable	200	Notes payable			150
	Inventories	200	Accruals			50
	Net fixed assets	500	Long-term debt			400
			Common stock			100
			Retained earnings			250
	Total assets	$1,000	Total liabilities and equity			$1,

The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the December 31, 2019, balance sheet (see attached Excel sheet) : Cash $100 Accounts payable $50...

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