Initial Information: Assume sales go from $100,000 to $200,000 in one year

for a firm that has a 5 percent profit margin on sales. At the same

time, assume assets represent 50 percent of sales and go from

$50,000 to $100,000 as sales double. The $10,000 of profit (5

percent $200,000) will hardly be adequate to finance the $50,000

asset growth. The remaining $40,000 must come from suppliers,

the bank, and perhaps stockholders.

Question:

Making this even trickier is that sales can be "lumpy," and not increase smoothly over time.If increasing sales cause the retailer to increase inventory (perhaps to not lose sales due to not having enough inventory on hand), then assets increase.What was the potential problem with that?