Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Great Subs believes it can increase sales by 50% without any increase in net fixed assets. Earnings after tax are expected to be $2,000. The

Great Subs believes it can increase sales by 50% without any increase in net fixed assets. Earnings after tax are expected to be $2,000. The company pays no dividends. What additional financing will Subs need to finance this growth? Subs balance sheet currently is as follows: Cash $ 2,500 Accounts Payable $ 5,600 Accounts Rec. 4,400 Notes Payable 10,000 Inventory 6,000 Long-term Debt 15,000 Fixed Assets, net 47,700 Stockholders Equity 30,000 $60,600 $60,600 a. $3,350 surplus -- no additional financing needed b. $1,650 c. $3,650 d. None of the answers is correct.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Generational Wealth Personal Financial Handbook

Authors: Sherique Dill

1st Edition

1985161222, 978-1985161221

More Books

Students also viewed these Finance questions