For purposes of this discussion, assume that you are the finance manager for Fuling Plastics, USA. In speaking with other managers, the firm's chief executive officer (CEO) has determined that substantial opportunities for growth exist. You have been invited to discuss Fuling Plastics, USA's financial ability to take advantage of these opportunities. You are aware that acquisition of Bunzl's supply chain abilities and existing assets are seen as an important strategy in managing Fuling Plastics' growth rate. Assume that current sales are $1,000. Fuling Plastics USA growth may exceed 50% in the upcoming year, and the Bunzl partnership may help alleviate the need for an expansion in fixed assets through other means. Using a percentage of sales methodology, assume that Fuling's net fixed assets are a fixed percentage (180 percent) of its sales, while costs are a fixed 80% of sales, so the firm's profit margin is constant. The company hopes to achieve at least a 25% growth in sales in the coming year. At the current level of sales, with Bunzl additions, capacity utilization will stand at 80%. Assume that Fuling maintains a fixed dividend ratio of 33.3%. Assume that current liabilities do not vary spontaneously with sales; we will disregard the effects of depreciation.

50% increase in sales Given: Current Sales Current Assets (Ratio to Sales) $1,000 20% Increase in Liabilities and Owner's Equity $225 Net fixed assets (Ratio to Sales) Costs (Ratio to Sales) Profit Margin 180% 80% Constant Existing Priorities Leave total net wo1king capital unchanged Keep dividend payout ratio constant Table 1. Fuling Data