Reference no: EM133017448

Question - Petal Providers Corporation opens and operates "mega" floral stores in the U.S. The idea behind the super store concept is to model the U.S. floral industry after its European counterparts whose flower markets generally have larger selections at lower prices. Revenues were $1,300,000 million with net profit of $45,000 last year when the first "mega" Petal Providers floral outlet was opened. Investment in assets was $730,000, with payables and accruals being $110,000 and equity being $440,000 the firm expects to pay half of its net profit as dividends.

If the economy grows rapidly next year, Petal Providers expects its sales to growth by 45 percent. However, if the economy exhibits average growth, Petal Providers expects a sales growth of 35 percent. For a slow economic growth scenario, sales are expected to grow next year at a 15 percent rate.

Management estimates the probability of each scenario occurring to be: rapid growth (.20); average growth (.50), and slow growth (.30). Petal Providers net profit margins are also expected to vary with the level of economic activity next year. If slow grow occurs, the net profit margin is expected to be 5 percent. Net profit margins of 7 percent and 10 percent are expected for average and rapid growth scenarios, respectively.

Required - Answer the following:

1. What is the net profit weak growth in dollars for next year?

2. What is the Sales Average Growth in dollars for next year?

3. What is the weighted average sales growth rate?

4. What is the expected net profit next year?

5. What is the Sales Weak Growth in dollars for next year?

6. What is the estimated amount of sales next year?

7. What is the net profit rapid growth in dollars for next year?

8. What is Sales Rapid Growth in dollars for next year?

9. What is the net profit average growth in dollars for next year?

10. What would be your estimate of the additional funds needed (AFN) next year to support an average growth scenario of sales?