Using the AFN formula approach, calculate the total assets of Harmon Photo Compa

Question

Using the AFN formula approach, calculate the total assets of Harmon Photo Company given the following information: Sales this year = $3,000; sales increase projected for next year = 20%; net income this year = $250; dividend payout ratio = 40%; projected excess funds available next year = $100; accounts payable = $600; notes payable = $100; and accrued wages and taxes = $200. Except for the accounts noted, there were no other current liabilities. Assume that the firm's profit margin remains constant and that the company is operating at full capacity. Answer $3,000 $2,200 $2,000 $1,200 $1,000

Explanation / Answer

AFN = (DS) - (DS) - MS1(RR)

-$100 = ($600) - ($600) - ($3,600)(0.6)

-$100 = 0.20A* - $160 - $180

0.20A* = $240

    A* = $1,200.

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