Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year's sales are projected to be $10,350. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.)
Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year's sales are projected to be $10,350. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.)
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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Transcribed Image Text:The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes):
Income Statement
$9,000
-6,750
Sales
Costs
Net income
$2,250
Balance Sheet
$10,200
18,600
Assets
$28,800
Debt
Equity
Total
$28,800
Total
$28,800
Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year's sales are projected to be
$10,350. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate
calculations. Round your answer to the nearest whole number.)
EFN
Expert Solution
Step 1
External Financing:
It refers to the financing a business needs outside of its resources. Hence, external financing involves taking a loan from a bank, selling a company's shares, etc.
External financing is done when a firm wants to increase its sales levels by increasing its assets.
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