Supposing that the 2022 sales are projected to increase by 25% over the year 2021 sales and that there is proportional relationship between sales to operating costs, interest expenses, current assets and spontaneous liabilities. The company has been operating at full capacity and planned to maintain the dividend ratio and profit margin position of the previous year. Required i. Using the Percentage of Sales proforma method, compute the additional funds needed (AFN), assuming that the company was operating at full capacity in the year 2021. ii. Using the Formula method, compute the additional funds needed, assuming that the company was operating at full capacity in the year 2021.
Supposing that the 2022 sales are projected to increase by 25% over the year 2021 sales and that there is proportional relationship between sales to operating costs, interest expenses, current assets and spontaneous liabilities. The company has been operating at full capacity and planned to maintain the dividend ratio and profit margin position of the previous year. Required i. Using the Percentage of Sales proforma method, compute the additional funds needed (AFN), assuming that the company was operating at full capacity in the year 2021. ii. Using the Formula method, compute the additional funds needed, assuming that the company was operating at full capacity in the year 2021.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 32BEB
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Supposing that the 2022 sales are projected to increase by 25% over the year 2021 sales and that there is proportional relationship between sales to operating costs, interest expenses, current assets and spontaneous liabilities. The company has been operating at full capacity and planned to maintain the dividend ratio and profit margin position of the previous year.
Required
i. Using the Percentage of Sales proforma method, compute the additional funds needed (AFN), assuming that the company was operating at full capacity in the year 2021.
ii. Using the Formula method, compute the additional funds needed, assuming that the company was operating at full capacity in the year 2021.
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