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44. Suppose that the 2013 actual and 2014 projected financial statements for Cramner Corp.
are initially as shown in the following tables. In these tables, sales are projected to rise 35
percent in the coming year, and the components of the income statement and balance sheet that
are expected to increase at the same 35 percent rate as sales are indicated with an
italics
font.
Assuming that Cramner Corp. wants to cover the AFN with 45 percent equity, 25 percent long-
term debt, and the remainder from notes payable, what amount of additional funds will they need
to raise if debt carries an 8 percent interest rate?
45. Suppose a firm has had the historical sales figures shown as follows. What would be the
forecast for next year's sales using the naїve approach?
46. Suppose a firm has had the historical sales figures shown as follows. What would be the
forecast for next year's sales using the naїve approach?
47. Suppose a firm has had the historical sales figures shown as follows. What would be the
forecast for next year's sales using the naїve approach?
48. Suppose a firm has had the historical sales figures shown as follows. What would be the
forecast for next year's sales using the average approach?
49. Suppose a firm has had the historical sales figures shown as follows. What would be the
forecast for next year's sales using the average approach?
50. Suppose a firm has had the historical sales figures shown as follows. What would be the
forecast for next year's sales using the average approach?
51. Suppose that Gyp Sum Industries currently has the balance sheet shown as follows, and
that sales for the year just ended were $20 million. The firm also has a profit margin of 22
percent, a retention ratio of 42 percent, and expects sales of $30 million next year. If all assets
and current liabilities are expected to grow with sales, how much additional funds will Gyp Sum
need from external sources to fund the expected growth?
52. Suppose that Psy Ops Industries currently has the balance sheet shown as follows, and
that sales for the year just ended were $6 million. The firm also has a profit margin of 9 percent,
a retention ratio of 5 percent, and expects sales of $8.5 million next year. If fixed assets have
enough capacity to cover the increase in sales and all other assets and current liabilities are
expected to increase with sales, how much additional funds will Psy Ops need from external
sources to fund the expected growth?
53. Goldilochs Inc. reported sales of $5 million and net income of $1 million. The firm has
$10.5 million in total assets. The firm's chief financial officer is projecting a 20 percent increase
in sales. If the firm's sales do increase by 20 percent, it is expected that spontaneous liabilities
will increase by $1 million. The firm currently pays out 30 percent of its net income to
shareholders. Assuming that all assets are expected to grow with sales, how much in additional
funds will Goldilochs need from external sources to fund the expected growth?
54. Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has
$10.5 million in total assets. The firm's chief financial officer is projecting a 20 percent increase
in sales. If the firm's sales do increase by 20 percent, it is expected that spontaneous liabilities
will increase by $500,000. The firm currently pays out 30 percent of its net income to
shareholders. Assuming that all assets are expected to grow with sales, how much in additional
funds will Goldilochs need from external sources to fund the expected growth?
55. Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that
sales for the year just ended were $15 million. The firm also has a profit margin of 23 percent, a
retention ratio of 40 percent, and expects sales of $20 million next year. If all assets and current
liabilities are expected to grow with sales, what is the projected increase in retained earnings?
56. Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that
sales for the year just ended were $15 million. The firm also has a profit margin of 23 percent, a
retention ratio of 40 percent, and expects sales of $20 million next year. If all assets and current
liabilities are expected to grow with sales, how much will spontaneous liabilities increase with
the increase in sales?
57. Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that
sales for the year just ended were $15 million. The firm also has a profit margin of 23 percent, a
retention ratio of 40 percent, and expects sales of $20 million next year. If all assets and current
liabilities are expected to grow with sales, what is the necessary increase in assets?
58. Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that
sales for the year just ended were $15 million. The firm also has a profit margin of 19 percent, a
retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current
liabilities are expected to grow with sales, what is the projected increase in retained earnings?
59. Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that
sales for the year just ended were $15 million. The firm also has a profit margin of 20 percent, a
retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current
liabilities are expected to grow with sales, how much will spontaneous liabilities increase with
the increase in sales?
60. Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that
sales for the year just ended were $12 million. The firm also has a profit margin of 20 percent, a
retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current
liabilities are expected to grow with sales, what is the necessary increase in assets?
61. Which of the following will increase the additional funds needed from external sources?
62. Which of the following will increase the additional funds needed from external sources?
63. Which of the following will decrease the additional funds needed from external sources?
64. Which of the following statements is correct?
65. All of the following will tend to increase spontaneously with sales EXCEPT:
66. Which of the following will increase a firm's need for additional funds?
