Cash 320 Receivables 1600 Inventories 2400 Total Current Assets 4320 Fixed Assets 2400 Total Assets 6720 AP 240 NP 400 Accruals 200 Total Current Liabilities 840 Long Term Debt 1600 Common Stock 1200 Retained Earnings 3080 Total Liabilities and Equity 6720 Sales for ABC were 8000 in 2014. Net income in 2014 was 800, dividends paid were 400, and its tax rate was 40%. ABC is operating at full capacity. Sales are projected to increase to 9200 in 2015. Asset/sales, spontaneous liabilities/sales, profit margin and dividend payout ratio will remain unchanged from 2014.
A) Using the AFN equation, calculate and show the external funds that must be raised in 2015.
B) Show how the external funds (AFN) in 2015 changes if ABC was not operating at full capacity in 2014 and explain the reason for the change.
C) Assume ABC is operating at full capacity. Show the projected balance sheet for 2015 if ABC finances half of its AFN with debt and half with equity. (Put new numbers next to the old ones)