--%>
Assignment Help - homework help

Long-Term Financing Needed

Long-Term Financing Needed : - At year-end 2012, total assets for Ambrose Inc. were $1.2 million and accounts payable were $375,000. Sales, which in 2012 were $2.5 million, are expected to increase by 25% in 2013. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Ambrose typically uses no current liabilities other than accounts payable. Common stock amounted to $425,000 in 2012 and retained earnings were $295,000. Ambrose plans to sell new common stock in the amount of $75,000. the firm's profit margin on sales is 6%; 60% earnings will be retained.

a. What was Ambrose's total debt in 2012?

b. How much new long-term debt financing will be needed in 2013? (Hint: AFN - New stock = New long-term debt.)

17-12 Excess Capacity

Edney Manufacturing Company has $2 billion in sales and $0.6 billion in fixed assets. Currently, the company's fixed assets are operating at 80% of capacity.

a. What level of sales could Edney have obtained if it had been operating at full capacity?

b. What is Edney's Target fixed asstes/ Sales ratio?

c. If Edney's sales increase 30%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/ Sales ratio?

   Related Questions in Corporate Finance

  • Q : APR of Loan When you take out an $8,000

    When you take out an $8,000 car loan that calls for 48 monthly payments of $225 each, then what is the APR of loan?

    		•
  • Q : Low-discrepancy sequence or quasi

    Who proposed definition and development of low-discrepancy sequence theory or quasi random number theory?

    		•
  • Q : Explain the definition of WACC An

    An investment bank computed my WACC. The report is as: “the definition of the WACC is defined as WACC = RF + βu (RM – RF); here RF being the risk-free rate and βu the unleveraged beta and RM the market risk rate.” It is differ from what we

    		•
  • Q : Explain modern quantitative

    Explain modern quantitative methodology for portfolio selection.

    		•
  • Q : Compute a company's cost of capital in

    How can we compute a company's cost of capital in emerging nations, particularly when there is no state bond that we could take as a reference?

    		•
  • Q : Purchaing or leasing problem Crawford

    Crawford Corporation is planning to lease a machine for the next 4 years for an annual lease payment of $3,000 paid in advance, plus a non-refundable initial fee of $3,000. There is a 1-year delay for the tax benefits of leasing. Crawford may buy the machine, deprecia

    		•
  • Q : Explain Value Chain Value Chain : The

    Value Chain: The value chain is a theory from business management that was first described and popularized Michel Porter in his 1985 best seller, Competitive Advantage: Creating and Sustaining Superior Performance.

  • Q : Applied approaches to theory development

    Discuss and distinguish between the following applied approaches to theory development:  true-income (income statement and balance sheet approaches), efficient markets, and predictive ability.  You may want to include in your discussion any articles or studies that either supported or u

    		•
  • Q : CAPM-Project Evaluation and Risk

    UCD Vet Products – a hypothetical publicly traded corporation (UCDV) — is considering investing in a new line of equine DNA analysis technology for race horse breeders. The project will yield the net cash flows listed in the table below. Assume that this p

    		•
  • Q : PV of Dividends PV of dividends:

    PV of dividends: Cortez, Inc., is expecting to pay out a dividend of $2.50 next year. After that it expects its dividend to grow at 7 percent for the next four years. What is the present value of dividends over the next five-year period if the required rate of return is 10 percent?

    		•