TUGAS MATA KULIAH ACCOUNTING AND FINANCE

WEEK- 5

Dosen:
Sri Handaru Yuliati, Dra., M.B.A.

Disusun Oleh:
Dwi Suci Indah Sari
(472026)
Kelas 78-A

PROGRAM MARTIKULASI MAGISTER MANAJEMEN

UNIVERSITAS GADJAH MADA
YOGYAKARTA
2021
EASY PROBLEMS (PAGE 221)

1. AFN EQUATION Carter Corporation’s sales are expected to increase from $5

million in 2015 to $6 million in 2016, or by 20%. Its assets totaled $3 million at the
end of 2015. Carter is at full capacity, so its assets must grow in proportion to
projected sales. At in the end of 2015, current liabilities are $1 million, consisting of
$250,000 of accounts payable, $500,000 of notes payable and $250,000 of accrued
liabilities. Its profit margin is forecasted to be 5% and the forecasted retention ratio is
30%. Use the AFN equation to forecast the additional funds Carter will need for the
coming year.
2. AFN EQUATION Refer to problem 1. What additional funds would be needed if
the company’s year-end 2015 assets had been $4 million? Assume that all other
number are the same. Why is this AFN different from the one you found in problem
1? Is the company’a “Capital intensity” the same or different? Explain.
3. AFN EQUATION Refer to problem 1 and assume that the company had $3 million
in assets at the end 2015. However, now assume that the company pays no
devidends. Under these assumptions, waht additional funds would be neede for the
coming year? Why is this AFN different from the one you found in the problem 1?
4. PRO FORMA INCOME STATEMENT Austin Grocers recently reported the
following 2015 income statement (in million of dollars):

Sales $ 700
Operating costs including depreciation $ 500
EBIT $ 200
Interest 40
EBT $ 160
Taxes (40%) 64
Net Income $ 96
Dividens $ 32
Addition to retained earnings $ 64

For the coming year, the company is forecasting a 25% increase in sales, and expect
that its year-end operating costs, including depreciation, will equal 70% of sales.
Austin’s tax rate, interest expense, and dividend payout ratio are all expected to
remain constant.
a. What is Austin’s projected 2016 net income?
b. What is the expected growth rate in Austin’s dividens?
5. EXCESS CAPACITY Walter Industries has $5 billion in sales and $1.7 billion in
fixed assets. Currently the company’s fixed assets are operating at 90% of capacity.
a. What level of sales could Walter Industries have obtained if it had been
operating at full capacity?
b. What is Walter’s target fixed assets/sales ratio?
c. If Walter’s sales increas 12%, how large of an increase in fixed assets will the
company need to meet its target fixed assets/sales ratio?
6. REGRESSION AND INVENTORIES Jasper Furnishings has $300 million in
sales. The company expects that its sales will increase 12% this year. Jasper’s CFO
use a simple linear regression to forecast the company’s inventory level for a given
level of projected sales. On the basis of recent history, the estimated relationship
between inventories and sales (in millions of dollars) is as follows:
Inventories = $25 + 0.125(Sales)
Given the estimated sales forecast and the estimated relationship between
inventories and sales, what are you forecast of the company’s year-end inventory
level and its inventory turnover ratio?

SOLUTIONS:
1. S0 = $5million S1 = $6million
A0 = $3million ∆S = $1million
M = 5% L0 = utang + akrual = $500,000
d = 1 – ratio retention = 0.7
AFN = (A0*/S0)∆S – (L0*/S0)∆S – MS1(1 – d)
$3,000,000 $500,000
= ($5,000,000)×$1,000,000 – ($5,000,000)×$1,000,000 – 0,05×6,000,000(1 – 0.7)

= 0.6×$1,000,000 – 0.1×$1,000,000 – $300,000×0.3

= $600,000 – $100,000 – $90,000

= $410,000
So, the additional funds Carter will needed for the coming year is $410,000.

2. A0 = $4million
Assume that all other number are same
AFN = (A0*/S0)∆S – (L0*/S0)∆S – MS1(1 – d)
$4,000,000 $500,000
= ($5,000,000)×$1,000,000 – ($5,000,000)×$1,000,000 – 0.05×6,000,000(1 – 0.7)

= 0.8×$1,000,000 – 0.1×$1,000,000 – $300,000×0.3

= $800,000 – $100,000 – $90,000

= $610,000
Capital intensity 6-2 more higher than capital intensity 6-1 because the capital
intensity ratio is measured as A*/S0 its shown the value of capital intensity 6-2
is 0,8 and 6-1 is 0,6.
3. A0 = $3million
Assume that company no pays deviden
AFN = (A0*/S0)∆S – (L0*/S0)∆S – MS1(1 – d)
$3,000,000 $500,000
= ($5,000,000)×$1,000,000 – ($5,000,000)×$1,000,000 – 0.05×6,000,000(1 – 0)

= 0.6×$1,000,000 – 0.1×$1,000,000 – $300,000

= $600,000 – $100,000 – $300,000

= $200,000
Additional funds 6-3 more lower than additional funds 6-1 because in this case
assumed that company pays no devidens its means 100% profit goes to the
company and retained earnings 6-3 more higher which would reduce the
amount of additional funds needed.

4. Income Statement

Year 2015 2016

Sales $ 700 $ 875
Operating costs including depreciation $ 500 $ 612.5
EBIT $ 200 $ 262.5
Interest 40 40
EBT $ 160 $ 222.5
Taxes (40%) 64 89
Net Income $ 96 $ 133.5
Dividens $ 32 $ 44.5
Addition to retained earnings $ 64 $ 89

S1 = 25%×$700 = $875
$𝟑𝟐
d payout ratio = $𝟗𝟔 = 0,33×100% = 33%

Tax = 40%
a. Austin’s projected 2016 net income:
Taxes = $222.5×0.4 = $89
Net income = $222.5 – $89 = $133.5
b. The expected growth rate in Austin’s dividens:
2016 deviden = $133.5×0.33 = $44.5
𝒏𝒆𝒕 𝒚𝒆𝒂𝒓 𝒅𝒆𝒗𝒊𝒅𝒆𝒏−𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒚𝒆𝒂𝒓 𝒅𝒆𝒗𝒊𝒅𝒆𝒏
Deviden Growth Rate = ( )×100%
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒚𝒆𝒂𝒓 𝒅𝒆𝒗𝒊𝒅𝒆𝒏
$𝟒𝟒.𝟓 − $𝟑𝟐
=( )×100% = 39.06%
$𝟑𝟐
5. S = $5 billion
A = $1.7 billion
90%
a. Sales at Full Capacity:
𝟏𝟎𝟎
Full capacity Sales = × $5,000,000,000
𝟗𝟎
$𝟓𝟎,𝟎𝟎𝟎,𝟎𝟎𝟎,𝟎𝟎𝟎
= 𝟗
= $5,555,555,555
b. Walter’s target fixed assets/sales ratio:
$𝟏,𝟕𝟎𝟎,𝟎𝟎𝟎,𝟎𝟎𝟎
FA/S ratio = $𝟓,𝟓𝟓𝟓,𝟓𝟓𝟓,𝟓𝟓𝟓 ×100%
= 0.306 × 100%
= 30.6%
c. Walter’s sales increas 12%
S0 = $5,000,000,000
S1 = 0.12 × $5,000,000,000 + $5,000,000,000
= $5,600,000,000

𝑭𝑨𝟏
FA/S ratio = $𝟓,𝟔𝟎𝟎,𝟎𝟎𝟎,𝟎𝟎𝟎
𝑭𝑨𝟏
0,306 = $𝟓,𝟔𝟎𝟎,𝟎𝟎𝟎,𝟎𝟎𝟎
FA1 = 0.306 × $5,600,000,000
= $1,713,600,000
Large of an increase in fixed assets:
FA1 – FA = $1,713,600,000 - $1,700,000,000
= $13,600,000
6. S = $300,000,000
Expected sales increas 12%
Inventories = $25,000,000 + 0.125(Sales)
S1 = 1.12 × $300,000,000 = $336,000,000
Expected inventory:
Inventories = $25,000,000 + 0.125(Sales)
= $25,000,000 + 0.125($336,000,000)
= $25,000,000 + $42,000,000
= $67,000,000
Turnover inventory ratio:
$𝟑𝟑𝟔,𝟎𝟎𝟎,𝟎𝟎𝟎
Sales/Inventory = $𝟔𝟕,𝟎𝟎𝟎,𝟎𝟎𝟎
= 5,01×