Below is the Dec 31, 2018 Balance Sheet for Everett Enterpri…
Below is the Dec 31, 2018 Balance Sheet for Everett Enterprises. Assume sales revenue for 2018 is $7 million. Assume capacity is at 100% in 2018, and that in 2019 sales are anticipated to increase 10% with a profit margin of 5 %. Everett’s forecasted 2019 retention ratio is 20%. Balance Sheet Dec. 31, 2018 Assets Cash 100,000 Accounts Receivable 500,000 Inventory 600,000 Current Assets 1,200,000 Net Fixed Assets 1,600,000 __________ ________ Total Assets 2,800,000 Liabilities and Equity Accounts Payable 325,000 Accruals 95,000 Notes Payable 205,000 Current Liabilities 625,000 LT Debt 1,000,000 Common Stock 950,000 Retained Earnings 225,000 _____________ ________ Total Liabilities and Equity 2,800,000 a. Use the AFN equation to determine the additional funding needed in 2019 in order to support the projected sales increase? b. How much of a sales increase could Everett Enterprises support without the need for external financing (Based on the AFN equation)? c. What will be the AFN if capacity is only 95% in 2018? d. What will be the following values on the projected balance sheet for 2019 based on the assumptions of the AFN equation but assuming 95% capacity instead of 100% capacity. Retained Earnings = Net Fixed Assets = Notes Payable =
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