Question
Question 2: Recall that in 2018 Executive Fruit ended the year with $1,000,000 of fixed assets and net working capital, and it had $3,000,000 of
Question 2:
Recall that in 2018 Executive Fruit ended the year with $1,000,000 of fixed assets and net working capital, and it had $3,000,000 of sales. In other words, each dollar of sales required $.70 of net assets. The company forecasts that sales in 2019 will increase by $300,000. Therefore, if the ratio of net assets to sales remains constant, assets in 2019 will need to rise by $.70 of this increase can be financed by reinvested earnings, which in 2019 are $40,000. So the amount of external financing needed is,
PLEASE PROVID DETAIED SLOUTION,
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started