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(Financial Forecasting) Sambonoza Enterprises proj...




(Financial Forecasting) Sambonoza Enterprises projects its sales next year to be 4 million and expects to earn 5 % of that amount after taxes. The firm is currently in the process of projecting it financing needs and has made the following assumptions: (projections): 1. Current assets will equal 22 percent of sales, and fixed assets will remain at their current level of 1 million 2. Common Equity is currently at $0.70 million and the firm pays out half of its after tax earning in dividends 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has not long term debt outstanding. What are Samboboza's financing needs for the coming year? When answering please set up in excel as a balance sheet, and show numbers and calculations for all steps in finding answers. (Percent of sales forecasting) Which of the following accounts would most likely vary directly with the level of a firm's sales? Discuss each briefly. Yes No Yes No Cash ___ ___ Notes payable ___ ____ Marketable securities ___ ___ Plant and equipment ___ ____ Accounts payable ___ ___ Inventories ___ ____ Is cash likely to vary directly with the level of a firm?s sales? ___ Yes, cash receipts vary directly with sales and have a relation to the firm?s customers payment habits or the firm?s policy regarding payments on its accounts payable. ___ No, cash receipts follow sales with a lag related to the payment habits of the firm?s customers and the firm?s policy regarding payments on its accounts payable (Cost of trade credit) calculate the effective cost of the following trade credit terms when payment is made on the net due date. Note assume a 30 day month and 360 day year. use approximate cost of credit formula a. 2/5, net 60 b. 2/10, net 45 c. 2/10, net 75 d. 4/15, net 60 Please show formula


Paper#6843 | Written in 18-Jul-2015

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