A Firm Has the Following Balance Sheet

question 83

Multiple Choice

A firm has the following balance sheet:
Cash:$ 10
Accounts payable:$ 10
Accounts receivable:10
Notes payable:20
Inventories:10
Long-term debt:40
Fixed assets:90
Common stock:40
Retained earnings:10
Total assets:$120
Total liabilities and equity:$120
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

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Definitions:

Retroactive Interference

A memory phenomenon where newer information interferes with the recall of older information.

List Differentiation

An ability to distinguish between memories, reducing the level of interference.

Memory Reconstruction

The alteration of a memory to provide a consistent view of the world.

Witnesses Recall

The ability of witnesses to remember and recount details of events, often used in the context of legal proceedings and psychology.