Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $6.6 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent and expects sales of $8.6 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments. Assets Liabilities and Equity $ 2,178,000 $ 1,584,000 Current liabilities 4,356,000 1,700,000 2,062,000 Current assets Fixed assets Long-term debt Equity Total assets $ 5,940,000 Total liabilities and equity $ 5,940,000 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? Note: Enter your answer in dollars not in millions. Round your answer to the nearest whole dollar. Additional funds needed
Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $6.6 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent and expects sales of $8.6 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments. Assets Liabilities and Equity $ 2,178,000 $ 1,584,000 Current liabilities 4,356,000 1,700,000 2,062,000 Current assets Fixed assets Long-term debt Equity Total assets $ 5,940,000 Total liabilities and equity $ 5,940,000 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? Note: Enter your answer in dollars not in millions. Round your answer to the nearest whole dollar. Additional funds needed
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 5P
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