Wednesday, August 10, 2011

Desperate for help! Please help with this problem?

Appalachian Registers, Inc. (ARI) has current sales of $50 million. Sales are expected to grow to $75 million next year. ARI currently has accounts receivable of $10 million, inventories of $15 million, and net fixed ets of $20 million. These ets are expected to grow at the same rate as sales over the next year. Accounts payable are expected to increase from their current level of $10 million to a new level of $13 million next year. ARI wants to increase its cash balance at the end of next year by $2 million over its current cash balances, which average $4 million. Net income next year is forecasted to be $10 million. Next year, ARI plans to pay dividends of $1 million, up from $500,000 this year . ARI's marginal tax rate is 34 percent. How much external financing does ARI require next year?

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