Ronnon, Inc. is a producer of infrastructure equipment for Internet Service Prov

Question

Ronnon, Inc. is a producer of infrastructure equipment for Internet Service Providers. Ronnon's sales forecast for 2010 and 2011 is $40 million and S46 million, respectively. Stockholders' equity as of January 1, 2010 was $32 million. The company's net profit margin after tax is 10% and it expects to pay annual dividends of 40% of net income. Current asset requirements are planned at 30% of sales and current liabilities are planned at 10% of sales. Net fixed assets are projected to be 1 10% of sales and long-term liabilities are expected to be 30% of total assets 41. Total asset requirements for 2011 will be: A. $34.4 million B. $37.2 million C. $56.0 million D. $64.4 million 42. Total liabilities and stockholders' equity before outside financing for 2010 will be: A. $56.0 million B. $64.4 million C. $55.2 million D. $61.1 million

Explanation / Answer

41)current asset = 46*.30=13.8

Net fixed asset = 46*110%= 50.60

Total asset requirement = 13.8+50.6= 64.4

correct option is "D"

42)Total asset for 2010 = [40*30%] +[40*110%]

                  12+ 44

                   56

Liabilities = [40*10%]+[56*30%]

                     4 +16.8

                       20.8

Net income =40*10% = 4

Net income after dividend = 4[1- .40]= 2.4

equity before financing = 32+2.4= 34.4

liabilities and equity before financing = 20.8+34.4= 55.2

correct option is "C"

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.