A Firm Has the Following Balance Sheet Fixed Assets Are Being Used at 80 Percent of Capacity;

question 139

Multiple Choice

A firm has the following balance sheet: $\begin{array}{c}\begin{array}{lr}\text { Cash } & \$ 10 \\\text { Accounts receivable } & 10 \\\text { Inventories } & 10 \\\text { Fixed assets } & 90 \\&\underline{\quad\quad}\\\text { Total assets } & -\$ 120\end{array}\begin{array}{lr} \text {Accounts payable}&\$10\\ \text {Notes payable}&20\\ \text {Long-tem debt}&40\\ \text {Common stock}&40\\ \text {Retained earnings}&\underline{10}\\ \text {Total liabilities and equity}&\underline{\$120}\end{array}\end{array}$
Fixed assets are being used at 80 percent of capacity; sales for the year just ended were $200; sales will increase
$10 per year for the next 4 years; the profit margin is 5 percent; and the dividend payout ratio is 60 percent.Assume that fixed assets cannot be sold.What are the total external financing requirements for the entire 4 years, i.e., the total AFN for the 4-year period?

• A)$4.00
• B)$2.00
• C)?$0.80 (Surplus)
• D)?$14.00 (Surplus)
• E)$0

---

Definitions:

Generative

Pertains to the ability to produce or create something new or innovative.

Symbolic

Representing something else, especially something abstract, through symbols or symbolism.

Semantic

Pertaining to meanings or the way meaning is constructed in language, especially the meaning of words and sentences.

Cognitive Revolution

The cognitive revolution refers to a significant shift in psychology during the 1950s to 1970s, emphasizing the study of the mind and internal mental processes.