I need help with two questions please. All work needs to be shown.
12-4) Maggieâ€™s Muffins, Inc. generated $5,000,000 in sales during 2013, and its year-end total assets were $2,500,000. In addition, at year-end 2013, current liabilities were $1,000,000 consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals.
Looking ahead to 2014, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 7%, and its payout ratio will be 80%.
How large a sales increase can the company achieves without having to raise funds externally- that is, what is its self-supporting growth rate?
12-6) The Booth Companyâ€™s sales are forecasted to double from $1000 in 2013 to $2000 in 2014. Here is the December 31, 2013, 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 $1000 Total liabilities and equity $1000
Boothâ€™s fixed assets were used to only 50% of capacity during 2013, 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 the same rate if the current excess capacity did not exist. Boothâ€™s after-tax profit margin is forecasted to be 5% and its payout ratio to be 60%. What is Boothâ€™s additional funds needed (AFN) for the coming year?