Suppose that Psy Ops Industries currently has the balance sheet shown below, and that sales for the year just ended were $4.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $7.4 million next year. Assets Current Liabilities and Equity $1,980,000 Current liabilities assets Fixed assets 3,700,000 Long-term debt Equity Total assets $5,680,000 Total liabilities and equity $ 1,672,000 1,800,000 2,208,000 $5,680,000 If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will Psy Ops need from external sources to fund the expected growth? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.) Additional funds needed
Suppose that Psy Ops Industries currently has the balance sheet shown below, and that sales for the year just ended were $4.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $7.4 million next year. Assets Current Liabilities and Equity $1,980,000 Current liabilities assets Fixed assets 3,700,000 Long-term debt Equity Total assets $5,680,000 Total liabilities and equity $ 1,672,000 1,800,000 2,208,000 $5,680,000 If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will Psy Ops need from external sources to fund the expected growth? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.) Additional funds needed
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 5P
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