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
Accounts receivable, May 31:
(.3 X May sales of $350,000)=$105,000
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.