Howton & Howton Worldwide (HHW) Is Planning Its Operations for the Coming

question 17

Multiple Choice

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 10% that was used in the past to 50%,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 10% to the new and higher level? All dollars are in millions. $\begin{array}{l}\begin{array}{lll} \text { Last year's sales = S0 } &\$ 300.0 \\ \text { Sales growth rate= g } &40 \% \\ \text { Last year's total assets =A 0 } & \$ 500.0 \\ \text { Last year's pro fit } \operatorname{margin}=\mathrm{MI} & 20.0 \% \\\end{array}\begin{array}{lll} \text { Last year's accounts payable } &\$ 50.0 \\ \text { Last year's notes payable (to bank) } &\$ 15.0 \\ \text { Last year's accruals } & \$ 20.0 \\ \text { Initial payout ratio } & 10.0 \%\\ \text { New payout ratio }&50.0 \% \end{array}\end{array}$

• A)$31.9
• B)$33.6
• C)$35.3
• D)$37.0

Learn about the importance of self-appraisals and subordinate evaluations in performance management systems.

Understand the mathematical definition of probability.

Grasp the conceptual similarities between probability and related concepts like likelihood.

Identify events and outcomes within the context of probability.

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Definitions:

Duty Of An Agent

The responsibilities and obligations that an agent has towards their principal, including acting in the principal's best interest.

Principal

In finance, refers to the original sum of money borrowed in a loan, or invested, separate from interest or profit.

Corresponding Right

A right that matches or is equivalent to an obligation, duty, or entitlement in a jurisprudential context.

Indemnify

To compensate for harm or loss sustained, or to protect someone by promising to compensate for the damage or loss they might incur.