+1-415-670-9189
info@expertsmind.com
Long-term financing needed
Course:- Financial Management
Reference No.:- EM13317




Assignment Help
Assignment Help >> Financial Management

Part - 1

At year-end 2012, total assets for Ambrose Inc. were $1.2 million and accounts payable were $375,000. Sales, which in 2012 were $2.5 million, are expected to increase by 25% in 2013. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Ambrose typically uses no current liabilities other than accounts payable. Common stock amounted to $425,000 in 2012 and retained earnings were $295,000. Ambrose plans to sell new common stock in the amount of $75,000. the firm's profit margin on sales is 6%; 60% earnings will be retained.

a. What was Ambrose's total debt in 2012?

b. How much new long-term debt financing will be needed in 2013? (Hint: AFN - New stock = New long-term debt.)

Part - 2

Edney Manufacturing Company has $2 billion in sales and $0.6 billion in fixed assets. Currently, the company's fixed assets are operating at 80% of capacity.

a. What level of sales could Edney have obtained if it had been operating at full capacity?

b. What is Edney's Target fixed asstes/ Sales ratio?

c. If Edney's sales increase 30%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/ Sales ratio?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Which of the following is the correct process for resolving consumer complaints? The Game Stop COrporation will pay an annual dividend of 1.92 next year. The company has incre
Crow, Inc., a not-for-profit company, has a product contribution margin of $40. The fixed costs are $800,000. Crow, Inc., has set a target profit of $35,000 per year. A. What
Assume a business can receive a guaranteed annual payment of $1M forever. If the appropriate discount rate 12.0%, how much should the business be willing to pay today for thes
A building 190 feet tall casts a 30-foot long shadow. If a person stands at the end of the shadow and looks up to the top of the building, what is the angle of the person's ey
Dewey Cheatem deposited $25,000 into a savings account. This savings account pays 8% annual interest compounded semi-annually. Beginning a year from now and continuing in perp
Discounted Payback Coughlin Motors is considering a project with the following expected cash flows: Year Project Cash Flow 0 –$830 million 1 200 million 2 373 million 3 228 mi
Sadik Inc.'s bonds currently sell for $1,334.00 and have a par value of $1000. They pay a $105.00 annual coupon and have a 12-year maturity, but they can be called in 8 years
These are the forecasts of revenues over the lifetime of a project. Assume all cash flows occur at the end of the year. Yearly expenses from year 1 to year 3: $0 Yearly expens