Question
7. Problem 16.08 (Long-Term Financing Needed) eBook Problem Walk-Through At year-end 2019, total assets for Arrington Inc. were $1.9 million and accounts payable were $450,000.
7. Problem 16.08 (Long-Term Financing Needed)
eBook Problem Walk-Through At year-end 2019, total assets for Arrington Inc. were $1.9 million and accounts payable were $450,000. Sales, which in 2019 were $2.40 million, are expected to increase by 20% in 2020. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Arrington typically uses no current liabilities other than accounts payable. Common stock amounted to $370,000 in 2019, and retained earnings were $280,000. Arrington plans to sell new common stock in the amount of $115,000. The firm's profit margin on sales is 3%; 35% of earnings will be retained.
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