Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At year-end 2014, total assets for Ambrose Inc. were $1.6 million and accounts payable were $345,000. Sales, which in 2014 were $2.3 million, are

 

At year-end 2014, total assets for Ambrose Inc. were $1.6 million and accounts payable were $345,000. Sales, which in 2014 were $2.3 million, are expected to increase by 20% in 2015. 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. Ambrose typically uses no current liabilities other than accounts payable. Common stock amounted to $455,000 in 2014, and retained earnings were $285,000. Ambrose plans to sell new common stock in the amount of $110,000. The firm's profit margin on sales is 4%; 70% of earnings will be retained. How much new long-term debt financing will be needed in 2015?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To calculate the ... blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Financial Management Theory and Practice

Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason

2nd Canadian edition

176517308, 978-0176517304

More Books

Students also viewed these Finance questions

Question

=+b. Within 1 standard deviation of the mean value?

Answered: 1 week ago

Question

=+a. Be within 1 standard deviation of the mean number of flaws?

Answered: 1 week ago