Answered step by step
Verified Expert Solution
Question
1 Approved Answer
At year-end 2019, total assets for Arrington inc, were $1.9 million and accounts payable were $445,000.$3 lev, which in 2019 were $2.10 milion, are expected
At year-end 2019, total assets for Arrington inc, were $1.9 million and accounts payable were $445,000.$3 lev, which in 2019 were $2.10 milion, are expected to increase by 10% 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 $420,000 in 2019 , and retained eamings were $455,000. Arrington plans to sell new common stock in the amount of $55,000. The firm's profit margin on sales is 4%; 50% of earnings will be retained. a. What were Arrington's total fiabilaties in 2010 ? Write out your answer completely, For example, 25 milion should be entered as 25,000,000. Round Yout answer to the nearect cent. $ b. How much new long torm debt financing will be needed in 2020 ? (Hint: AFN - New stock = New long term debt.) Write out your answer completely For example. 25 milkion should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent. \$
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started