Zapatera Enterprises is evaluating its financing requirements for the coming yea

Question

Zapatera Enterprises is evaluating its financing requirements for the coming year. The firm has only been in business for one year, but its CFO predicts that the firm's operating expenses, current assets, net fixed assets, and current liabilities will remain at their current proportion of sales. Last year Zapatera had S12.09 million in sales with net income of SI. 18 million. The firm anticipates that next year's sales will reach S14.03 million with net income rising to S2.12 million. Given its present high rate of growth, the firm retains all of its earnings to help defray the cost of new investments. The firm's balance sheet for the year just ended is as follows: Estimate Zapatera's total financing requirements (total assets) and its net funding requirements (discretionary financing needed) for 2014.

Explanation / Answer

Particular 2013 2014 Growth Sales 12.09 14.03 Earning 1.18 2.12 Current Assets 2.6 3.017152 21.51% Net Fixed Assets 6.1 7.078837 50.46% 8.7 10.09599 Account payable 3.4 3.945517 28.12% Long term debt 1.6 1.6 Total liabilty 5 5.545517 Common equity 1.3 1.3 Paid up equity 1.7 1.7 Retained earning 0.7 1.550471 Retained earning Current assets + net fixed assets- total liabilty- common equity- paid up capital

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