Name five key factors that affect a firms external financing requirements?
Question 1
Define each of the following terms.
a.Operating plan, financial plan
b. Spontaneous liabilities, profit margin, payout
c.Additional funds needed (AFN; AFN equations capital intensity ratios, self-supporting growth rate.
d. Forecasted financial statement approach using percent of sales
e. Exceed capacity; lumpy assets; economies of scale
f. Full capacity sales target fixed assets/sales ratios required level of fixed assets
Question 2
Name five key factors that affect a firms external financing requirements?
Question 3
Maggies muffins, Inc., generated $5,000,000 in sales during 2013, and its year-end total were $2,500,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2014, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will increase by %7 and its payout ratio will be %80. How large a sales increase can the company achieve without having to raise funds externallythat is, what is its self-supporting growth rate?
