Meltzer Electronics estimates that its total financing needs for the coming year will be $34.5 million. During the coming fiscal year

11-1 Meltzer Electronics estimates that its total financing needs for the coming year will be $34.5 million. During the coming fiscal year, the firm’s required financing payments on its debt-and-equity financing will toal $12.9 million. The firm’s financial manager estimates that operating cash flows for the coming year will total $33.7 million and that the following changes will occur in the accounts noted.

Account Forecast Change

Gross fixed assets $8.9 million

Change in current assets +2.3 million

Change in accounts payable +1.3 million

Change in accrued liabilities +0.8 million

Use Equation 2.3 and the data provided to estimate Meltzer’s free cash flow in the coming year.

How much of the free cash flow will the firm have available as a source of new internal financing in the coming year?

How much external financing will Meltzer require during the coming year to meet its total forecast financing need?


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