Additional Funds Needed The Booth Company\'s sales are forecasted to double from

Question

Additional Funds Needed The Booth Company's sales are forecasted to double from $1,000 in 2015 to $2,000 in 2016. Here is the December 31, 2015, balance sheet: Booth's fixed assets were used to only 50% of capacity during 2015, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 3% and its payout ratio to be 70%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar.

Explanation / Answer

Projected balance sheet for 2016 Assets Amount ($) Liabilities Amount ($) cash 359 Accounts payables 100 Accounts Receivable 400 Notes payables 300 Inventories 400 Accruals 100 Net Fixed Assets 500 Long term Debt 800 Common Stock 100 Retained Earnings 259 Total Assets 1659 Total Liability & Equity 1659 Additional Funds required = increase in cash balance = 359-100 = $259

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