The Booth Company’s sales are forecasted to increase from $1,000 in 2006 to
$2,000 in 2007. Here is the December 31, 2006, balance sheet:

Booth’s fixed assets were used at full capacity during 2006. All assets and spontaneous liabilities increase at the same rate as sales. Booth’s after-tax profit margin is forecasted to be 5 percent, and its payout ratio will be 60 percent. What is Booth’s additional funds needed (AFN) for the coming year?

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The Booth Company's sales are forecasted to double from $1,000 in 2012 to $2,000 in 2013. Here is the December 31, 2012, balance sheet:
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Inventories 200 Accruals 50
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Common stock 100
Retained earnings 250
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Booth's fixed assets were used to only 50% of capacity during 2012, but its current assets were at their proper levels in relation to sales. Spontaneous liabilities and all assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 8% and its payout ratio to be 50%. What is Booth's additional funds needed (AFN) for the coming year?

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Cash $ 100 Accounts payable $ 50
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Cash $ 100 Accounts payable $ 50

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Net fixed assets 500 Long-term debts 400

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Boothâs fixed assets were used to only 50% of capacity during 2013, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Boothâs after-tax profit margin is forecasted to be 5% and its payout ratio to be 60%. What is Boothâs additional funds needed (AFN) for the coming year?

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