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Question uploaded via image United Health Products has the following balance sheet: Current assets $5,000 Net fixed assets $5,000 Total assets $10,000 Accounts payable $1,000
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United Health Products has the following balance sheet: Current assets $5,000 Net fixed assets $5,000 Total assets $10,000 Accounts payable $1,000 Notes payable $1,000 Long-term debt $4,000 Common equity $4,000 Total liabilities and equity $10,000 Business has been slow; therefore, fixed assets are lastly underutilized. Management believes it can double sales next year with the introduction of a new product. No new fixed assets will be required, and management expects that there will be no earnings retained next year. What is next year's external financing requirement? ANSWER Here is the forecasted balance sheet: Current assets $10,000 Net fixed assets $5,000 Total assets $15,000 Accounts payable $2,000 Notes payable Long-term debt Common equity Total liabilities and equity $2,000 External financing requirement = $15,000 - $11,000 - $4,000Step by Step Solution
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