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Carter Corporation's sales are expected to increase from 5 million dollar in 2005 to $6 million in 2006, or by 20 percent. Its assets totaled 3 million dollar at the end of 2005. Carter is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2005, current liabilities are 1 million dollar, consisting of $250,000 of accounts payable, $500,000 of notes payable, & $250,000 of accrued liabilities. The after-tax profit margin is forecasted to be 5%, and the forecasted retention ratio is 30%. Apply the AFN equation to evaluate Carter's additional funds needed for the coming year.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M919900

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