Author Question: A company expects sales to increase during the coming year, and it is using the AFN equation to ... (Read 13 times)

ahunt13 · **on:** Aug 7, 2023

Question 1

A Canadian firm has net income of $15,000 on sales of $70,000, fixed assets of $92,000, and total assets of $145,000. The firm retains 65% of its earnings. If the firm is operating at 80% capacity, what are the full capacity sales?

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$80,000

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$83,000

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$87,500

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$90,000

Question 2

A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to decrease?

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The company increases its dividend payout ratio.

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The company begins to pay employeesmonthly bonuses instead of quarterly.

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The company previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity.

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The company’s profit margin decreases.

gyvette · **Reply #1 on:** Aug 7, 2023

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