Various and Capital Structures:Charter Enterprises currently has $1 million in total assets and is totally equity financed. It is contemplating a change in its capital structure. Compute the amount of debt and equity that would be outstanding if the firm were to shift to each of the following debt ratios: 10%, 20%, 30%, 40%, 50%, 60%, and 90%. (Note: The amount of total assets would not change). Is there a limit to the debt ration value?
Blake Henderson and Anna Kraft are preparing a plan to submit to venture capitalist to fund their business, Music Masters. The company plans to spend $380,000 on equipment in the first quarter of 2008. Salaries and other operating expenses (paid as incurred) will be $35,000 per month beginning in January 2008 and will continue at that level thereafter. The company will receive its first revenues in January 2009, with cash collections averaging $30,000 per month for all of 2009. In January 2010, cash collections are expected to increase to $100,000 per month and continue at that level thereafter. Assume that the company needs enough funding to cover all its cash needs until cash receipts start exceeding cash disbursements. How much venture capital funding should Blake and Anna seek?
Suppose a lumber yard has the following data:
Â· Accounts receivable, May 31: (.3 X May sales of $350,000)=$105,000
Â· Monthly forecasted sales: June, $430,000; July, $440,000; August, $500,000; September, $530,000
Sales consist of 70% cash and 30% credit. All credit accounts are collected in the month following the sales. Uncollectible accounts are negligible and may be ignored.
Prepare a sales budget schedule and a cash collections budget schedule for June, July and August.