At year-end 2009, total assets for Shome Inc. were $1.2 million and accounts payable were $375,000. Sales,
Question:
At year-end 2009, total assets for Shome Inc. were $1.2 million and accounts payable were $375,000. Sales, which in 2009 were $2.5 million, are expected to increase by 25 percent in 2010. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Shome typically uses no current liabilities other than accounts payable. Common stock amounted to $425,000 in 2009, and retained earnings were $295,000. Shome plans to sell new common stock in the amount of $75,000. The firm’s profit margin on sales is 6 percent, and 40 percent of earnings will be paid out as dividends.
a. What was Shome’s total debt in 2009?
b. How much new, long-term debt financing will be needed in 2010?
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Step by Step Answer:
a Total assets Total liabilities equity Accounts payable Longterm debt Common stock Retaine...View the full answer
Essentials of Managerial Finance
ISBN: 978-0324422702
14th edition
Authors: Scott Besley, Eugene F. Brigham
