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Author Question: Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants ... (Read 50 times)

unreallynx

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Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 20% that was used in the past to 60%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 20% to the new and higher level? All dollars are in millions.

 

Last year’s sales = S0

$400

Last year’s accounts payable

$60

Sales growth rate = g

35%

Last year’s notes payable (to bank)

$49

Last year’s total assets = A0

$600

Last year’s accruals

$30

Last year’s profit margin = M

30%

Initial payout ratio

20%

New payout ratio

60%

 


$60.0


$62.5


$64.8


$67.0



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Marked as best answer by unreallynx on Aug 7, 2023

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unreallynx

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review


marict

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Reply 3 on: Yesterday
Wow, this really help

 

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