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Suppose that Gamma Company currently has the following balance sheet, and that sales for the year just ended were $7 million. The firm also has
Suppose that Gamma Company currently has the following balance sheet, and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $8 million next year. If all assets and current liabilities are expected to grow with sales, what amount of additional funds will Gamma need from external sources to fund the expected growth?
Assets Liabilities & Equity | |
Current Assets $2,000,000
Fixed Assets 5,000,000 | Current Liabilities $2,500,0000 Long term Debt 1,000,000 Equity 3,000,000 |
Total Assets $7,000,000 | Total Liabilities & Equity $7,000,000 |
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