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APT Security?s sales are expected to increase from...

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APT Security?s sales are expected to increase from R4 m in 2009 to R5m in 2010, or by 25%. Its assets totaled R3 m at the end of 2009. APT is at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2009, current liabilities were R800 000, consisting of R200 000 of accounts payable, R400 000 of notes payable, and R200 000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 60%. Use this information to answer questions (a), (b) and (c) below. (a) Use the AFN formula to forecast APT Security?s additional funds needed for the coming year. (b) What would be the additional funds needed if APT?s year end 2009 assets had been R3.5 m? Assume that all other numbers are the same. Why is this AFN different from the one you found in (a) above? Is the company?s ?capital intensity? the same or different? (c) Return to the assumption that the company had R3 m in assets at the end of 2009, but now assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Why is this AFN different from the one you found in (a) above?,1. How did you come out with the Assets of 30,000,000 Increase in assets(30,000,000*25%) according to the information the total assets is 3m 2. Profit after tax(40,00,000x5%)where is this 40,00,000 coming from 3.The increase in sales (50,00,000-40,00,000) coming from Not It look like yuo add 0 on the actual amount i.e 5m you say 50m please assist

 

Paper#12596 | Written in 18-Jul-2015

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