Philip Morris is excited because sales for his clothing company are expected to double from $500,000 to $1,000,000 next year. Philip notes that net assets (Assets - Liabilities) will remain at 50 percent of Sales. His clothing firm will enjoy a 0 percent return on total sales. He will start the year with $100,000 in the bank and is already bragging about the two Mercedes he will buy and the European vacation he will take. Does his optimistic outlook for his cash position appear to be correct? Compute his likely cash balance or deficit for the end of the year. Stan with beginning cash and subtract the asset buildup (equal to 50 percent of the sales increase) and add in profit. In Problem 1 if there had been no increase in sales and all other facts were the same, what would Philip's ending cash balance be? What lesson do the examples fit in Problems 1 and 2 illustrate? Galehouse Gas Stations, Inc., expects sales to increase from $1,500,000 G to $1,700,000 next year. Mr. Galehouse believes that net assets (Assets - Liabilities) will represent 70 percent of sales. His firm has a 10 percent return on sales and pays 40 percent of profits out as dividends. What effect will this growth have on funds? If the dividend payout is only 15 percent, what effect will this growth have on funds? The Alliance Corp. expects to sell the following number of units of copper cables