Question
A company has the following information for the current year: Current assets $42,500 Current liabilities $24,650 Noncurrent assets 224,000 Noncurrent liabilities 173,200 Total assets $266,500
A company has the following information for the current year:
Current assets | $42,500 | Current liabilities | $24,650 |
Noncurrent assets | 224,000 | Noncurrent liabilities | 173,200 |
Total assets | $266,500 | Retained earnings | 19,475 |
|
| All other equity | 49,175 |
|
| Total liabilities and equity | $266,500 |
Sales revenue is forecasted to grow by 6% next year, forecasted net income is expected to be $35,000, and all current assets and current liabilities vary proportionally with sales. If $40,000 worth of net noncurrent assets are required to be purchased next year, what is the external financing needed? Assume that the company does not pay dividends, and that all noncurrent liabilities and equity (except retained earnings) will be the same level as the current year.
A. $5,893
B. $6,071
C. $6,250
D. $6,428
E. $6,607
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