Answer:
AFN (Additional Funds needed) is $ 11.59 Million, Growth rate is 6.87 %.
Explanation:
1) Additional Funds Needed or AFN can be calculated as below=
AFN = (Total Assets / Previous year sales) x Change in Sale -( Liabilities affected by sales / Previous year sales) x Change in Sale - (Projected net income x Retention ratio ) ----- (a)
According to given data in question
Total Assets= 122.5 million
Change in Sales = 70
Liabilities affected by sales = 17.5
Previous year sales = 375
Projected net income = 445
Putting the above values in equation (a)
AFN = (122.5 / 375) x 70 -( 17.5 / 375) x 70 - 445 x 0.030 x 0.60
AFN = 11.59 million
2) Growth rate : Growth rate formula is given below,
Growth rate = (Total Assets x g) - (Liabilities affected by sales x g ) - Previous year sales ( 1 +g) x 0.3 x 0.60
Growth rate = 6.87 %
3) Proforma Balance Sheet for Upton Computer is :
Cash 4.15 Million
Accounts Receivable 30.85 Million
Inventories 68.83 Million
Total Current Assets 103.84 Million
Net Fixed Assets 41.53 Million
Total Assets 145.37 Million
Line of Credit-AFN 11.59 Million
Accounts Payable 18 Million
Accruals 10.09 Million
Total Current Liabilities 50.36
Mortgage Loan 6 Million
Common Stock 15 Million
Retained Earning 74.01 Million
Total Current Liabilities & Equity --- 145.37 Million
