Charles-Baker, International, Inc. expects sales to increase to $36 million next
ID: 2728999 • Letter: C
Question
Charles-Baker, International, Inc. expects sales to increase to $36 million next year from $27 million this year. Its current assets are $9 million, accounts payable is $2.7 million, fixed assets are $9 million, long-term debt is $3.6 million, owners' equity is $11 million, and the earnings after tax-to-sales ratio is 5%. Current assets and accounts payable can be assumed to increase in the same proportion as sales. Other current liabilities are expected to say the same. Net fixed assets will increase by $1 million in the firm plans to pay $800,000 as dividends. A. What areCharles-Baker, International, Inc.'s total financing needs for next year? B. How much money with the firm have to borrow to finance its needs? Charles-Baker, International, Inc. expects sales to increase to $36 million next year from $27 million this year. Its current assets are $9 million, accounts payable is $2.7 million, fixed assets are $9 million, long-term debt is $3.6 million, owners' equity is $11 million, and the earnings after tax-to-sales ratio is 5%. Current assets and accounts payable can be assumed to increase in the same proportion as sales. Other current liabilities are expected to say the same. Net fixed assets will increase by $1 million in the firm plans to pay $800,000 as dividends. A. What areCharles-Baker, International, Inc.'s total financing needs for next year? B. How much money with the firm have to borrow to finance its needs?Explanation / Answer
all figures are in millions sales old sales new 27 36 bills payable 2.7 current assets 9 long term debt 3.6 net assets 9 equity 11 new sales 36 old sales 27 17.3 18 increase in sales 0.3333333 new current assets 11.9997 new accpounts payable 3.59991 new new assets 10 earnings 1.8 dividend 0.8 liabilities amount assets amount bills payable 3.59991 current assets 11.9997 debt 3.6 net fixed assets 10 equity 11 12 earning of the year 1 amount of borrowing to finance its need 2.79979 total 21.9997 21.9997 projected financing need current Assets+net fixed assets 21.9997 amount of borrowing to finance its need 2.79979