If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)
If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)
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:Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance
sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including
fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.
Balance Sheet
(in $ millions)
Liabilities and Stockholders' Equity
Assets
$ 20
Accounts payable
Accrued wages
Cash
8.
Accounts receivable
23
4
Inventory
25
Accrued taxes
10
$ 34
$ 56
Notes payable
Current assets
Current liabilities
Fixed assets
44
14
Common stock
18
Retained earnings
34
$100
Total liabilities and stockholders' equity
$ 100
Total assets
Owen's Electronics has an aftertax profit margin of 7 percent and a dividend payout ratio of 45 percent.
If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round
intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)
New funds
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