Broussard Skateboard\'s sales are expected to increase by 15% from $8 million in

Question

Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $4 million at the end of 2013. Baxter is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2013, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 3%. Assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Do not round intermediate calculations. Round your answer to the nearest dollar.

At year-end 2013, Wallace Landscaping

Explanation / Answer

Broussard Skateboard 15% increase in sales Sales 8000000 9200000 NATIncome 240000 276000 Less :Dividends 0 0 Retained earnings 240000 276000 Increase in retained earnings (276000-240000) 36000 Assets Net fixed assets 4000000 4600000 Current Liabilities Accounts payable 450000 450000 Notes Payables 500000 500000 Accruals 450000 450000 Retained earnings Additional Financing financing needed (AFN) = increase in assets ? increase in liabilities

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