Calculate AFN.
Company sales are forecasted to double from $1,000 in 2016 to $2,000 in 2017. Here is the December 31, 2016 Balance Sheet:
cash $100 Accounts Payable $50
Accounts receviable 200 Notes payable 150
Inventories 200 Accrurals 50
Net fixed assets 500 Long term debt 400
Common Stock 100
Retained earnings 250
Total Assets $1,000 Total Liab & Equity $1,000
Fixed assets were used to only 50% of capacity during 2016, but 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 at the same rate if the current excess capacity did not exist. The after tax profit margin is forecasted to be 5% and its payout ratio to be 60%. Calculate the additional funds needed (AFN) for the coming year: