Question

List and explain the issues in estimating needed assets to support a projected expansion in sales...

List and explain the issues in estimating needed assets to support a projected expansion in sales in forecasting financial statements.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Issues in estimating needed assets for projected expansion are:

1. Inaccurate estimation: The forecasting of sales involves dome ups and down. When there is less information available in market about the estimation of assets this can leads to either under or overestimation.

2. Estimation is a process of trial and error, so it would be iterating.

3. Quick arrangement of assets would create a problem, as that would be fine at much higher costs.

4. Estimation of needed assets is time consuming, takes lot of efforts from the whole planning team.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Database Systems is considering expansion into a new product line. Assets to support expansion will cost...
Database Systems is considering expansion into a new product line. Assets to support expansion will cost $380,000. It is estimated that Database can generate $1,410,000 in annual sales, with an 8 percent profit margin. What would net income and return on assets (investment) be for the year?
Suppose Mariposa, Inc.’s Sales are projected to grow by 20% next year. It has total assets...
Suppose Mariposa, Inc.’s Sales are projected to grow by 20% next year. It has total assets that grow proportionately with sales. Current total assets are $2 million and current total sales are $1 million. The only liabilities that change with sales are accounts payable, which are currently $300,000. The profit margin and dividend payout ratio are constant. The profit margin is 15 percent and the dividend payout ratio is 60 percent. Using the “percent of sales” approach, answer the following...
list two examples of the legal issues that commonly arise in an individual support setting
list two examples of the legal issues that commonly arise in an individual support setting
Urban’s, which is currently not operating at full capacity, has sales of $47,000, current assets of...
Urban’s, which is currently not operating at full capacity, has sales of $47,000, current assets of $5,100, current liabilities of $6,200, net fixed assets of $51,500, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. No new equity will be issued. The firm does not pay any dividends. Sales are expected to increase by 3 percent next year. The following items vary directly with sales – current assets and short-term...
The most recent financial statements for Fleury, Inc., follow. Sales for 2012 are projected to grow...
The most recent financial statements for Fleury, Inc., follow. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales?...
The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to...
The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. SCOTT, INC. 2019 Income Statement   Sales $ 759,000   Costs 594,000   Other expenses 30,000   Earnings before interest and taxes $ 135,000   Interest expense 26,000   Taxable income $ 109,000   Taxes (21%)...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement   Sales $ 760,000   Costs 595,000   Other expenses 31,000   Earnings before interest and taxes $ 134,000   Interest paid 27,000   Taxable income $ 107,000   Taxes (22%) 23,540...
The most recent financial statements for Fleury Inc., follow. Sales for 2015 are projected to grow...
The most recent financial statements for Fleury Inc., follow. Sales for 2015 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales. FLEURY, INC. 2014 Income Statement   Sales $ 750,000   Costs 585,000   Other expenses 21,000   Earnings before interest and taxes $ 144,000   Interest paid 17,000   Taxable income $ 127,000   Taxes (20%) 25,400...
The most recent financial statements for Fleury Inc., follow. Sales for 2015 are projected to grow...
The most recent financial statements for Fleury Inc., follow. Sales for 2015 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales. FLEURY, INC. 2014 Income Statement   Sales $ 755,000   Costs 590,000   Other expenses 11,000   Earnings before interest and taxes $ 154,000   Interest paid 12,000   Taxable income $ 142,000   Taxes (40%) 56,800...
The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to...
The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. SCOTT, INC. 2019 Income Statement   Sales $ 752,000   Costs 587,000   Other expenses 23,000   Earnings before interest and taxes $ 142,000   Interest expense 19,000   Taxable income $ 123,000   Taxes (24%)...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT