Ronnon, Inc. is a producer of infrastructure equipment for Internet Service Providers. Ronnon\'s
sales forecast for 2010 and 2011 is $40 million and S46 million, respectively. Stockholders\'
equity as of January 1, 2010 was $32 million. The company\'s net profit margin after tax is 10%
and it expects to pay annual dividends of 40% of net income. Current asset requirements are
planned at 30% of sales and current liabilities are planned at 10% of sales. Net fixed assets are
projected to be 1 10% of sales and long-term liabilities are expected to be 30% of total assets 41.
Total asset requirements for 2011 will be: A. $34.4 million B. $37.2 million C. $56.0 million D.
$64.4 million 42. Total liabilities and stockholders\' equity before outside financing for 2010 will
be: A. $56.0 million B. $64.4 million C. $55.2 million D. $61.1 million
Solution
41)current asset = 46*.30=13.8
Net fixed asset = 46*110%= 50.60
Total asset requirement = 13.8+50.6= 64.4
correct option is \"D\"
42)Total asset for 2010 = [40*30%] +[40*110%]
12+ 44
56
Liabilities = [40*10%]+[56*30%]
4 +16.8
20.8
Net income =40*10% = 4
Net income after dividend = 4[1- .40]= 2.4
equity before financing = 32+2.4= 34.4
liabilities and equity before financing = 20.8+34.4= 55.2
correct option is \"C\".
Ronnon, Inc. is a producer of infrastructure equipment for Internet S.pdf
1. Ronnon, Inc. is a producer of infrastructure equipment for Internet Service Providers. Ronnon's
sales forecast for 2010 and 2011 is $40 million and S46 million, respectively. Stockholders'
equity as of January 1, 2010 was $32 million. The company's net profit margin after tax is 10%
and it expects to pay annual dividends of 40% of net income. Current asset requirements are
planned at 30% of sales and current liabilities are planned at 10% of sales. Net fixed assets are
projected to be 1 10% of sales and long-term liabilities are expected to be 30% of total assets 41.
Total asset requirements for 2011 will be: A. $34.4 million B. $37.2 million C. $56.0 million D.
$64.4 million 42. Total liabilities and stockholders' equity before outside financing for 2010 will
be: A. $56.0 million B. $64.4 million C. $55.2 million D. $61.1 million
Solution
41)current asset = 46*.30=13.8
Net fixed asset = 46*110%= 50.60
Total asset requirement = 13.8+50.6= 64.4
correct option is "D"
42)Total asset for 2010 = [40*30%] +[40*110%]
12+ 44
56
Liabilities = [40*10%]+[56*30%]
4 +16.8
20.8
Net income =40*10% = 4
Net income after dividend = 4[1- .40]= 2.4
equity before financing = 32+2.4= 34.4
liabilities and equity before financing = 20.8+34.4= 55.2
correct option is "C"
![Ronnon, Inc. is a producer of infrastructure equipment for Internet Service Providers. Ronnon's
sales forecast for 2010 and 2011 is $40 million and S46 million, respectively. Stockholders'
equity as of January 1, 2010 was $32 million. The company's net profit margin after tax is 10%
and it expects to pay annual dividends of 40% of net income. Current asset requirements are
planned at 30% of sales and current liabilities are planned at 10% of sales. Net fixed assets are
projected to be 1 10% of sales and long-term liabilities are expected to be 30% of total assets 41.
Total asset requirements for 2011 will be: A. $34.4 million B. $37.2 million C. $56.0 million D.
$64.4 million 42. Total liabilities and stockholders' equity before outside financing for 2010 will
be: A. $56.0 million B. $64.4 million C. $55.2 million D. $61.1 million
Solution
41)current asset = 46*.30=13.8
Net fixed asset = 46*110%= 50.60
Total asset requirement = 13.8+50.6= 64.4
correct option is "D"
42)Total asset for 2010 = [40*30%] +[40*110%]
12+ 44
56
Liabilities = [40*10%]+[56*30%]
4 +16.8
20.8
Net income =40*10% = 4
Net income after dividend = 4[1- .40]= 2.4
equity before financing = 32+2.4= 34.4
liabilities and equity before financing = 20.8+34.4= 55.2
correct option is "C"](https://image.slidesharecdn.com/ronnoninc-230709103758-f2a021ea/85/Ronnon-Inc-is-a-producer-of-infrastructure-equipment-for-Internet-S-pdf-1-320.jpg)
