The most recent financial statements for Moose Tours. Inc., appear below. Sales
ID: 2752145 • Letter: T
Question
The most recent financial statements for Moose Tours. Inc., appear below. Sales for 2012 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 25 percent growth rate in sale? (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount, (e.g., 32))Explanation / Answer
Since, company working at 100% capacity, net plant and equipement needs investment for additional sales.
AFN = (A/S0)S–(L/S0)S–MS1(RR) A- Assets tied directly to sales L-spontaneous liabilities that are affected by sales S0=the previous year's sales S1=total projected sales for next year S=the change in sales between S0 and S1 MS1=projected net income RR=the retention ratio from net income AFN $ 27,812.00 ((485020)/752000)*188000-((55300)/752000)*188000-940000*12.1%*(1-30%)