Question

LLFP Incorporated currently has $890 million in sales, which are projected to grow by 13% in Year 1 and by 8% in Year 2. Its operating profitability ratio (OP) is 11%, and its capital requirement ratio (CR) is 79%.

What are the projected sales in Year 1?

Answer 1

The projected sales for LLFP Incorporated in Year 1 are calculated by applying the 13% sales growth rate to the current sales of $890 million, resulting in projected sales of $1005.7 million.

Step-by-step explanation:

The student asks about projected sales growth for LLFP Incorporated. To calculate the projected sales in Year 1, we use the provided sales growth rate of 13%. Starting with the current sales of $890 million, we apply the growth rate as follows:

Projected Sales in Year 1 = Current Sales + (Current Sales × Growth Rate)

Projected Sales in Year 1 = $890 million + ($890 million × 0.13) = $890 million + $115.7 million = $1005.7 million.

Therefore, the projected sales for LLFP Incorporated in Year 1 would be $1005.7 million.