Murphy had sales for the year ended Decemberâ 31, 2016, of â$51.47 million. The firm follows a policy of paying all net earnings out to its common stockholders in cash dividends.â Thus, Murphy generates no funds from its earnings that can be used to expand its operations.â (Assume that depreciation expense is equal to the cost of replacingâ worn-out assets.). Hintâ: Make sure to round all intermediate calculations to at least five decimal places. a. If Murphy anticipates sales of â$99.05 million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry. b. How much new financing will Murphy need nextâ year? c. What are the limitations of theâ percent-of-sales forecastâ method? Discuss briefly. a. If Murphy anticipates sales of â$99.05 million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry.âââ(Round to the nearestâ dollar.)
partial credit,P17-6 (similar to)
Question Help
â(Forecasting financingâ needs) The current balance sheet of the Murphyâ Forklifts, Inc., is asâ follows:
LOADING...
. Murphy had sales for the year ended Decemberâ 31, 2016, of
â$51.4751.47
million. The firm follows a policy of paying all net earnings out to its common stockholders in cash dividends.â Thus, Murphy generates no funds from its earnings that can be used to expand its operations.â (Assume that depreciation expense is equal to the cost of replacingâ worn-out assets.).
Hintâ:
Make sure to round all intermediate calculations to at least five decimal places.a. If Murphy anticipates sales of
â$99.0599.05
million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry.
b. How much new financing will Murphy need nextâ year?
c. What are the limitations of theâ percent-of-sales forecastâ method? Discuss briefly.
a. If Murphy anticipates sales of
â$99.0599.05
million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry.âââ(Round to the nearestâ dollar.)
Murphyâ Forklifts, Inc., Balanceâ Sheet, Decemberâ 31, 2016â ($ millions)
Current assets
â$9.999.99
Accounts payable
â$5.995.99
Net fixed assets
14.4714.47
Notes payable
0.000.00
Total
â$24.4624.46
Bonds payable
10.1210.12
Common equity
8.358.35
Total
â$24.4624.46
Data Table
Murphy had sales for the year ended Decemberâ 31, 2016, of â$51.47 million. The firm follows a policy of paying all net earnings out to its common stockholders in cash dividends.â Thus, Murphy generates no funds from its earnings that can be used to expand its operations.â (Assume that depreciation expense is equal to the cost of replacingâ worn-out assets.). Hintâ: Make sure to round all intermediate calculations to at least five decimal places. a. If Murphy anticipates sales of â$99.05 million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry. b. How much new financing will Murphy need nextâ year? c. What are the limitations of theâ percent-of-sales forecastâ method? Discuss briefly. a. If Murphy anticipates sales of â$99.05 million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry.âââ(Round to the nearestâ dollar.)
partial credit,P17-6 (similar to) | Question Help |
â(Forecasting financingâ needs) The current balance sheet of the Murphyâ Forklifts, Inc., is asâ follows:
LOADING...
. Murphy had sales for the year ended Decemberâ 31, 2016, of
â$51.4751.47
million. The firm follows a policy of paying all net earnings out to its common stockholders in cash dividends.â Thus, Murphy generates no funds from its earnings that can be used to expand its operations.â (Assume that depreciation expense is equal to the cost of replacingâ worn-out assets.).
Hintâ:
Make sure to round all intermediate calculations to at least five decimal places.a. If Murphy anticipates sales of
â$99.0599.05
million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry.
b. How much new financing will Murphy need nextâ year?
c. What are the limitations of theâ percent-of-sales forecastâ method? Discuss briefly.
a. If Murphy anticipates sales of
â$99.0599.05
million during the comingâ year, develop a pro forma balance sheet for the firm for Decemberâ 31, 2017. Assume that current assets are a percent ofâ sales, net fixed assets remainâ unchanged, and accounts payable vary as a percentage of sales. Use notes payable as a balancing entry.âââ(Round to the nearestâ dollar.)
Murphyâ Forklifts, Inc., Balanceâ Sheet, Decemberâ 31, 2016â ($ millions) | |||||
Current assets | â$9.999.99 | Accounts payable | â$5.995.99 | ||
Net fixed assets | 14.4714.47 | Notes payable | 0.000.00 | ||
Total | â$24.4624.46 | Bonds payable | 10.1210.12 | ||
Common equity | 8.358.35 | ||||
Total | â$24.4624.46 |
Data Table