ACC 406 Lecture Notes - Lecture 3: Asset Turnover, Profit Margin, Soo Line Railroad
Document Summary
Managers will initially assume, no new debt, and no new common stock is sold determine external funds needed. *add external funds needed to this chart by 1990. Total financing ( liability + equity ) available. Ap + ail + std + ltd + cs + re = = 7500. Total financing available = 5510, problem because it should be 7500. External funds needed = total assets total financing available = 7500 5510 = 1990. If external funds needed is negative you could pay of debt or buy back stocks. If operating at 60 % capacity, everything will remain the same except for net fixed assets: fcs = current sales / current capacity = 10000/ 0. 60 = 16,667, compare forecasted sales to fcs 15000 < 16667. If operating at 80 % capacity: capital intensity of fcs = current nfa / fcs = 3500 / 12500 = 0. 28, forecasted nfa= 0. 28 * forecasted sales = 0. 28 * 15000 = 4200.
