Question
Ey-ef-en Company's sales are forecasted to increase from P1M in 2020 to P2M in 2021. Hereunder is the December 31, 2020, balance sheet: Cash P
Ey-ef-en Company's sales are forecasted to increase from P1M in 2020 to P2M in 2021. Hereunder is the December 31, 2020, balance sheet:
Cash
P 100,000
Accounts receivable
200,000
Inventories
200,000
Net fixed assets
500,000
Total assets
P1,000,000
Accounts payable
P 50,000
Notes payable
150,000
Accruals
50,000
Long-term debt
400,000
Common stock
100,000
Retained earnings
250,000
Total Liabilities & Equity
P1,000,000
Ey-ef-en's fixed assets were used to only 50 percent of capacity during 2020, buts its current assets were at their proper levels. All assets except fixed assets increase at the same rate as sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. Heart's after-tax profit margin is forecasted to be 5 percent, and its payout ratio will be 60 percent. What is Heart's additional funds needed for the coming year?
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