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Long-term company financial planning generates use of financial statements. External financing needed (EFN) is a prediction regarding the external financing a company will need based on sales forecasts, or the external financing a corporation will want to finance forecasted sales. The data required to determine the external financing wishes (EFN) about a company can be found on the business financial sheets such being the balance sheet also the income statement. The formula to determine external financing wishes (EFN) yous: EFN = ((assets/sales) X âsales) - ((spontaneous liabilities/sales) X âsales) - (PM X projected sales X (1 - d)) âsales = the projected modify with sales in bill volume. Spontaneous liabilities = liabilities that change together with changes from sales. Listed on financial forms as accounts owing. PM = Profit margin ratio = net income/sales d = dividend payout proportion = cash dividends/net earnings This document exhibits through instance how to decipher for EFN for the subsequent information supplied: assets = $10,000 sales = $4,075 âsales = $1,160 spontaneous liabilities = $120 net income = $570.5 money dividends = $171.15
Trouble: Reasonable Instructions
Things You'll Need:
1 Solve to secure the revenue margin proportion (PM), the dividend payout proportion (d), and projected sales. profit margin proportion (PM) = net earnings/sales income margin ratio (PM) = $570.5/$4,075 profit margin ratio (PM) = 0.14 profit margin ratio (PM) = 14% dividend payout proportion (d) = cash dividends/net earnings dividend payout ratio (d) = $171.15/$570.5 dividend payout ratio (d) = 0.3 dividend payout ratio (d) = 30% projected sales = sales + âsales projected sales = $4,075 + $1,160 projected sales = $5,235
2 Locate all the information needed to solve with external financing needed (EFN). means = $10,000 sales = $4,075 âsales = $1,160 spontaneous liabilities = $120 PM = 0.14 Projected Sales = $5,235 d = 0.3
3 Plug the information in the external financing needed (EFN) formula external financing needed (EFN) = ((assets/sales) X âsales) - ((spontaneous liabilities/sales) X âsales) - (PM X projected sales X (1 - d)) external financing needed (EFN) = (($10,000/$4,075) X $1,160) - (($120/$4,075) X $1,160) - (0.14 X $5,235 X (1 - 0.3)
