BHS Incorporated determines that sales will rise from $400,000 to $550,000 next year. Spontaneous assets are 60% of sales,and spontaneous liabilities are 30% of sales. BHS has an 8% profit margin and a 40% dividend payout ratio. What is the level ofrequired new funds?

External financing is one of the most important tactics in the business. It helps in raising…

Answered: BHS Incorporated determines that sales…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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BHS Incorporated determines that sales will rise from $400,000 to $550,000 next year. Spontaneous assets are 60% of sales, and spontaneous liabilities are 30% of sales. BHS has an 8% profit margin and a 40% dividend payout ratio. What is the level of required new funds?