What are Tulley’s total financing needs (i.e., total assets)
for the coming year?
Principles of Finance, course text Foundations of Finance)
14-4. (Financial forecasting—percent of sales) Tulley Appliances
Inc. projects next year’s sales to be $20 million. Current sales
are $15 million, based on current assets of $5 million and fixed
assets of $5 million. The firm’s net profit margin is 5 percent
after taxes. Tulley forecasts that its current assets will rise in
direct proportion to the increase in sales, but that its fixed
assets will increase by only $100,000. Currently, Tulley has $1.5
million in accounts payable (which vary directly with sales), $2
million in long-term debt (due in 10 years), and common equity
(including $4 million in retained earnings) totaling $6.5 million.
Tulley plans to pay $500,000 in common stock dividends next
a.What are Tulley’s total financing needs (i.e., total assets)
for the coming year?
b.Given the firm’s projections and dividend payments plans, what
are its discretionary financing needs?
c.Based on your projections, and assuming that the $100,000
expansion in fixed assets will occur, what is the largest increase
in sales the firm can support without having to resort to the use
of discretionary sources of financing? Alternative Investments (from Principles of Finance course)
Complete the Mini Case from the end of Chapter 8 and submit to
instructor. In Parts a, c, and d, clearly label the calculation of
the required formulas and solve using Excel. Use formulas to
calculate the ratios and format the cells to insert a comma if
there is more than three numbers. Round dollar amounts to the penny
and percentages to two decimal places as percentages. In Parts b
and c, justify your answer in a crisp statement not to exceed 50
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
1. Capital Cities ABC, Inc. bonds with a par value of $1,000,
that pays an 8.75 percent on its par value in interest, sells for
$1,314, and matures in 12 years.
2. Southwest Bancorp preferred stock paying a dividend of
$2.50 and selling for $25.50.
3. Emerson Electric common stock selling for $36.75, with a
par value of $5. The stock recently paid a $1.32 dividend and the
firm’s earnings per share has increased from $1.49 to $3.06 in the
past five years. The firm expects to grow at the same rate for the
Your required rates of return for these investments are 6 percent
for the bond, 7 percent for the preferred stock, and 15 percent for
the common stock. Using this information, answer the following