I need help learning how to find a AFN, I see the answer but how do I get to it?
Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2016 to $9.2 million in 2017. Its assets totaled $5 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2013, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard’s additional funds needed for the coming year.
Sales Expected (2013) $9,200,000.00
Increase in Assets $750,000.00
After tax profit margin $552,000.00
Increase in Liabilities $135,000.00
Dividend Payments $220,800.00
Addition to Retained Earnings $331,200.00
AFN = Increase in Assets = Increase in Liabilities – Addition to Retained Earnings
AFN = $283,800.00
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