Yeats Corporation Is Trying to Determine Its Short-Term Cash Needs

question 52

Essay

Yeats Corporation is trying to determine its short-term cash needs. Given the following information, how much money will Yeats need to borrow next year?

•Sales in Year 9 are expected to be $500 million
•Operating margin is expected to be 8%
•Interest expense is expected to be $6 million (ignore additional interest expense generated by additional borrowings in Year 9)
•Tax rate is 40%
•Dividend payout ratio is 30%
•Increase in working capital is 5% of sales
•Increase in fixed assets is 10% of sales
•No new equity will be issued

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Definitions:

Perceptual Barriers

Psychological obstacles that interfere with communication and understanding between people.

Practical Barriers

Real-world obstacles that hinder progress or the implementation of plans, ranging from resource limitations to regulatory constraints.

HRM Strategies

Plans and approaches developed by an organization's human resource department to achieve its personnel and organizational goals.

Employee Behaviour

The actions and conduct of individuals within an organization, encompassing their work performance and interactions with others.