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$5.00 AFN equation
- From Business: Accounting
- Closed, but you can still post tutorials
- Due on Dec. 02, 2007
- Asked on Nov 25, 2007 at 6:51:30PM
Q:Carter's Corporation sales are expected to increase from $5 million in 2005 to $6 million in 2006, or by 20 percent. Its assets totaled $3 million at the end of 2005. Carter is at full capacity; so its assets must grow in proportion to projected sales. At the end of 2005, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable and $250,000 of accrued liabilities. The after-tax profit margin is forecasted to be 5 percent and the forecasted retention ratio is 30 percent. Use the AFN equation to forecast Carter's additional funds needed for the coming year.
