A company projects that next year's sales will grow 19% and ROA (net income divided by the previous year's total assets) is constant at 13%, but long-term debt and equity do not change with sales automatically (except for the new retained earnings). The current year's total assets and accounts payable are $8000 and $500. Accounts payable usually grow at the same rate as sales. The company's plowback ratio is always 40%. Assuming that total assets must grow at the same speed as sales, what is next year's external financing need (round to the closest whole number and the answer could be negative)? Your Answer:
A company projects that next year's sales will grow 19% and ROA (net income divided by the previous year's total assets) is constant at 13%, but long-term debt and equity do not change with sales automatically (except for the new retained earnings). The current year's total assets and accounts payable are $8000 and $500. Accounts payable usually grow at the same rate as sales. The company's plowback ratio is always 40%. Assuming that total assets must grow at the same speed as sales, what is next year's external financing need (round to the closest whole number and the answer could be negative)? Your Answer:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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