Question
A firm has the following balance sheet: Cash $ 20 Accounts payable $ 20 Accounts Receivable 30 Notes payable 50 Inventory 30 Long-term debt 80
A firm has the following balance sheet:
Cash | $ 20 | Accounts payable | $ 20 |
Accounts Receivable | 30 | Notes payable | 50 |
Inventory | 30 | Long-term debt | 80 |
Net Fixed assets | 180 | Common stock | 90 |
|
| Retained earnings | 20 |
Total assets | 260 | Total liabilities and Equity | 260 |
Sales for the year just ended were $400. The firm is operating at much less than full capacity, so it will not need to increase fixed assets. Sales are expected to grow by 5 percent next year, the profit margin is 6 percent, and the dividend payout ratio is 60 percent. How much additional funding will be needed by the firm?
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