Wagner Industrial Motors, which is currently operating at full capacity, has sales of $29,000, current assets of $1,600, current liabilities of $1,200

A Procrustes approach to financial planning is based on:    A.  a policy of producing a financial plan once every five years. B.  developing a plan around the goals of senior managers. C.  a proactive approach to the economic outlook. D.  a flexible capital budget. E.  a flexible capital structure.

44.

Fresno Salads has current sales of $6,000 and a profit margin of 6.5 percent. The firm estimates that sales will increase by 4 percent next year and that all costs will vary in direct relationship to sales. What is the pro forma net income?    A.  $303.33 B.  $327.18 C.  $405.60 D.  $438.70 E.  $441.10 Net income = $6,000 × .065 × (1 + .04) = $405.60

45.

Wagner Industrial Motors, which is currently operating at full capacity, has sales of $29,000, current assets of $1,600, current liabilities of $1,200, net fixed assets of $27,500, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 4.5 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year?    A.  -$259.75 B.  -$201.19 C.  $967.30 D.  $1,099.08 E.  $1,515.25 Projected assets = ($1,600 + $27,500) × 1.045 = $30,409.50 Projected liabilities = $1,200 × 1.045 = $1,254 Current equity = $1,600 + $27,500 - $1,200 = $27,900 Projected increase in retained earnings = $29,000 × .05 × 1.045 = $1,515.25 Equity funding need = $30,409.50 - $1,254 - $27,900 - $1,515.25 = -$259.75