StudyXY
RegisterLog in

Forecasting Additional Funds Needed (AFN) for Carter Corporation

Solving for additional funds needed by Carter Corporation using financial forecasting techniques.

Dylan Price
Contributor
4.9
32
6 months ago
Preview (3 of 9 Pages)
100%
Purchase to unlock

Page 1

Forecasting Additional Funds Needed (AFN) for Carter Corporation - Page 1 preview image

Loading page ...

Forecasting Additional Funds Needed (AFN) for Carter Corporation1.AFN equationCarter Corporation's sales are expected to increase from $5 million in 2012 to $6 million in 2013, or by 20%.Its assets totaled $3 million at the end of 2012. Carter is at full capacity, so its assets must grow inproportion to projected sales. At the end of 2012, current liabilities are $1 million, consisting of $250,000 ofaccounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin isforecasted to be 7%, and the forecasted retention ratio is 40%. Use the AFN equation to forecast theadditional funds Carter will need for the coming year. Write out your answer completely. For example, 5million should be entered as 5,000,000. Round your answer to the nearest cent.$332,000AFN= (A*/S0)S–(L*/S0)S–MS1(RR)=$5,000,000$3,000,000$1,000,000–$5,000,000$500,000$1,000,000–0.07($6,000,000)(0.4)= (0.6)($1,000,000)–(0.1)($1,000,000)–($420,000)(0.4)= $600,000–$100,000–$168,000= $332,000.2.Problem 17-2AFN equationCarter Corporation's sales are expected to increase from $5 million in 2012 to $6 million in 2013, or by20%. Its assets totaled $5 million at the end of 2012. Carter is at full capacity, so its assets must grow inproportion to projected sales. At the end of 2012, current liabilities are $1 million, consisting of $250,000 ofaccounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. The after-tax profitmargin is forecasted to be 6%, and the forecasted retention ratio is 40%. Use theAFN equation to forecastCarter's additional funds needed for the coming year. Write out your answer completely. For example, 5million should be entered as 5,000,000. Round your answer to the nearest cent.$756,000AFN=)40,000)(0.006($06.000,000)(0.1)($1,0$1,000,000$5,000,000,000,0005$−−= (1)($1,000,000)–$100,000–$144,000= $1000,000–$244,000= $756,000.Now assume the company's assets totaled $3 million at the end of 2012. Is the company's "capitalintensity" the same or different comparing to initial situation?_________________AFN =)4,000)(0.0006($06.000,000)(0.1)($1,0$1,000,000$5,000,000,000,0003$−−

Page 2

Page 3

Preview Mode

This document has 9 pages. Sign in to access the full document!

Study Now!

XY-Copilot AI
Unlimited Access
Secure Payment
Instant Access
24/7 Support
Document Chat

Document Details

Subject
Finance

Related Documents

View all
Past Exams

Texas Life and Health Insurance Exam 150 Questions

A study-sharing site offering verified Q&A for the Texas Life and Health Insurance Exam. Ideal for candidates preparing for certification with updated 2023 content, covering key laws, policies, and insurance concepts.

Class Notes

Understanding Obligation and Deobligation in Resou

Obligation: legally reserving funds for expenses e.g: travel orders. Deobligation: adjusting obligations downward when actual costs are less, freeing funds for other needs. Ensures efficient effective use of finite resources in government operations.

Solved Assignments

Budgeting for Life After High School

High school budgeting activity featuring a real-life scenario for college student Lisa. Students create a zero-based budget using her income, expenses, and support funds to learn personal finance, savings, and responsible spending.

Solved Assignments

Ch 4 les 1

Zach, a college freshman, uses his new credit card with a 19% APR for emergencies during a work break, facing minimum payments that may lead to costly interest and debt.

Class Notes

Understanding Credit Reports Analyzing John's Fina

This activity uses John Doe's financial story and a sample credit report to help students learn how to read and understand credit reports. Students analyze his credit use, debts, and recent financial inquiries to answer related questions.

Solved Assignments

Financial Statement Analysis

Detailed breakdown of financial statements and key performance indicators.

Solved Assignments

CEO pay at John Deere and Caterpillar

Compares CEO pay at two companies.

Solved Assignments

Financial Planning and Budget Analysis

A financial study on budgeting techniques and financial planning strategies.

Solved Assignments

Financial Research Report

A detailed report analyzing financial trends, risk factors, and economic indicators.

Solved Assignments

WACC Project Verizon Communication Inc

This document provides a comprehensive analysis of the Weighted Average Cost of Capital (WACC) for Verizon, offering insights into financial decision-making and investment strategies.