4-8 AFN (Additional Funds Needed) Key Assumptions Operating at full capacity in 2001 Each type of asset grows proportionally with sales Payables and accruals grow proportionally with sales 2001 profit margin(2.52%)and payout (30%)will be maintained Sales are expected to increase by $500 million.(%AS= 25%) Copy right C 2002 by Harcourt, Inc. All rights reserved4 - 8 Copyright © 2002 by Harcourt, Inc. All rights reserved. AFN (Additional Funds Needed): Key Assumptions ◼Operating at full capacity in 2001. ◼ Each type of asset grows proportionally with sales. ◼ Payables and accruals grow proportionally with sales. ◼ 2001 profit margin (2.52%) and payout (30%) will be maintained. ◼ Sales are expected to increase by $500 million. (%S = 25%)