Long-term financing needed
Course:- Financial Management
Reference No.:- EM13317

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
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

Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Mr. Kim has just opened a margin account with a local brokerage firm. The firm has a policy of 60% initial margin and 40% maintenance margin. Mr. Kim initially buys 100 shares
Consider the following financial statement information for the Windbag Balloon Corporation: Calculate the operating and cash cycles. How do you interpret your answer? In gener
After a 4-for-1 stock split, Perry Enterprises paid a dividend of $1.70 per new share, which represents a 8% increase over last year's pre-split dividend. What was last year's
Your client is 29 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $9,000 per year; and you advise her t
The R.M Smithers Corporation earned an operating profit margin of 11.2 percent based on sales of 10.5 millionand total assets of 4.8 million last year. What was Smither's tota
BSBFIM501 Manage Budget and Financial Plans Assignment. Design and develop a spreadsheet to capture budgeted and actual figures to produce a variance report. Access actual bud
Bourdon Software has 12 percent coupon bonds on the market with 16 years to maturity. The bonds make semiannual payments and currently sell for 108.8 percent of par. Current y
Metroplex Corporation will pay a $2.70 per share dividend next year. The company pledges to increase its dividend by 4.40 percent per year indefinitely. Required: If you requi