Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

After adding a new line of widgets, Worldwide expects all assets and current liabilities to shrink with sales. the company has sales for the year

After adding a new line of widgets, Worldwide expects all assets and current liabilities to shrink with sales. the company has sales for the year just ended of $20 million. The company also has a profit margin of 20 percent, a return ratio of 25 percent, and expected sales of $18 million next year.

Worldwide Widgets Manufacturing, Inc., shows the following on its balance sheet:

Assets Liabilities & Equity
Current Assets $2,500,000 Current liabilites $1,250,000
Fixed Assets $3,500,000 Long-term Debt $1,500,000
Equity $3,250,000
Total Assets $6,000,000 Total Liabilities & Equity $6,000,000

What amount of additional funds (AFN) will worldwide need from external sources to fund the expected growth? What does the AFN show?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions