Marvel Ltd.: Understanding External Funds Requirement

What is the external funds requirement (EFR) of Marvel Ltd. for the forthcoming year?

Given the financial data for Marvel Ltd., how can we determine the external funds requirement (EFR) for the upcoming year?

External Funds Requirement Calculation

The external funds requirement (EFR) of Marvel Ltd. for the forthcoming year is Rs. 381.2 million.

Marvel Ltd. has provided the following financial information: S = Rs. 20 million, A/S = 0.8, L/S = 0.40, m = 0.06, S1 = Rs. 100 million, and d = 0.4. To calculate the EFR, we can use the formula: EFR = (S1 - S) / (1 - A/S) - (1 - m) * S.

Substitute the given values into the formula: EFR = (100 - 20) / (1 - 0.8) - (1 - 0.06) * 20.

Simplify the equation: EFR = 80 / 0.2 - 0.94 * 20 = 400 - 18.8 = Rs. 381.2 million.

Therefore, Marvel Ltd. will require Rs. 381.2 million in external funds for the forthcoming year. This calculation is essential for the company to plan its financial strategies and ensure sufficient resources for future operations.