Related to Checkpoint 171 Discretionary financing needs Harr

(Related to Checkpoint 17.1) (Discretionary financing needs) Harrison Electronics, Inc. operates a chain of electrical lighting and fixture distribution centers throughout northem Arizona. The firm is anticipating expansion of its sales in the coming year as a result of recent population growth trends. The firm\'s financial analyst has prepared pro forma balance sheets that reflect three different rates of growth in firm sales for the coming year and the corresponding non-discretionary sources of financing the firm expects to have available, as follows: a. What are the firm\'s discretionary financing needs under each of the three growth scenarios? Data Table b. What potential sources of financing are there for Harrison to fulfl its needs for discretionary financing? a. The discretionary financing needs for a 10% growth scenario are $ |- (Round to the nearest dollar.) The Calculation 10% 20% 40% Current assets S13,200,000 $19,800,000 $33,000,000 $2,200,000 2,200,000 1,500,000 $5,900,000 6,500,000 $12,400,000 $1,000,000 2,000,000 15,550,000 $18,550,000 $30,950,000 $14,400,000 $21,600,000 $36,000,000 $2,400,000 2,400,000 1,500,000 $6,300,000 6,500,000 $12,800,000 $1,000,000 2,000,000 15,600,000 $18,600,000 $31,400.,000 $16,800,000 $25,200,000 42,000,000 $2,800,000 2,800,000 1,500,000 $7,100,000 6,500,000 $13,600,000 $1,000,000 2,000,000 15,700,000 $18,700,000 S32,300,000 discretionary financing needs for a 20% growth scenario are S (Round to the nearest dollar ) The discretionary financing needs for a 40% growth scenario are S. (Round to the nearest dollar) b. What potential sources of financing are there for Harrison to fulfl its needs for discretionary financing?( Net fixed assets Total Accounts payable Accrued expenses Notes payable No change A. Common stock. B. Retained eamings. Current liabilities Long-term debt No change C. Sale of fixed assets. Total liabilities D. Notes payable. E. Long-term debt. Common stock (par) Paid-in capital Retained eamings No change No change Common equity Projected sources of financing Discretionary financing needs Total financing needs= Total assets Click to select your answerls).

Solution

Discretionary Financing Needs (DFN) = {Total Financing Needs} less {Projected Sources of Financing a) b) c) a) 10.00% 20.00% 40.00% Total Financing Needs $33,000,000.00 $36,000,000.00 $42,000,000.00 Less: Projected Sources of Financing $30,950,000.00 $31,400,000.00 $32,300,000.00 Discretionary Financing Needs (DFN) $2,050,000.00 $4,600,000.00 $9,700,000.00 b) The potential sources of financing are :- Common Stock Notes Payable Long term Debt