Following is the balance sheet for the end of the year 2018 for Silver Spurs, Inc.:
2018 2019
Current Assets $15,000 _______________
Net Fixed Assets 20,000 _____________________________
Total Assets $35,000 __________________
Accounts Payable $ 2,000 ________________
Notes Payable 1,000 ________________
Long-Term Debt 10,000 ________________
Common Equity 22,000
Total Liabilities/Equity $35,000 __________________
AFN _________________
They have generated sales for 2018 of $35,000 resulting in net income of $15,000.
Due to the difficulty associated with acquiring raw materials, Silver Spurs has experienced sluggish business that has caused fixed assets to be underutilized.
Management thinks it can double sales in 2019 through the introduction of a new product.
No new fixed assets will be required and the dividend payout ratio will be 100%.
Assume no additional deprecation expense will be taken in 2019.
Assume notes payable at the end of 2018 are paid off in 2019.
Project next year’s balance sheet in the space provided above to determine the additional funding needed (AFN) for this new product.
NOTE: Fixed assets do NOT include Current Assets.
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