Question
Last year, Gerrico produced sales of $400 with a net profit margin of 20%. The firm used $1,000 in assets to generate the sales and
Last year, Gerrico produced sales of $400 with a net profit margin of 20%. The firm used $1,000 in assets to generate the sales and those assets were financed with $400 of liabilities and $600 of equity. The firm does not pay any dividends. Gerrico expects next years sales to be $455. Assuming that all assets and all liabilities change in direct proportion to sales, the dollar amount of liabilities that Gerrico expects to be able to rely on to finance additional assets for next year is $______. Do not include the dollar sign in your answer and round to the nearest penny.
Please show all work in detail please :)
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