Question
Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $6.9 million. The firm also
Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $6.9 million. The firm also has a profit margin of 30 percent, a retention ratio of 20 percent, and expects sales of $8.9 million next year. Fixed assets are currently fully utilized, and the nature of Wall-Es fixed assets is such that they must be added in $1 million increments. Assets Liabilities and Equity Current assets $ 1,449,000 Current liabilities $ 1,725,000 Fixed assets 4,761,000 Long-term debt 1,550,000 Equity 2,935,000 Total assets $ 6,210,000 Total liabilities and equity $ 6,210,000 If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth?
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