Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the yea just ended were $9.2 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent, and expects sales of $7.2 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed $ 720,000 Current liabilities 4,800,000 Long-term debt Equity $5,520,000 Total liabilities and equity $ 938,400 1,900,000 2,681,600 $5,520,000 If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from external sources to fund the expected growth? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.)

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
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Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year
just ended were $9.2 million. The firm also has a profit margin of 25 percent, a retention ratio of 30
percent, and expects sales of $7.2 million next year.
Assets
Current assets
Fixed assets
Total assets
Liabilities and Equity
Additional funds needed
$ 720,000 Current liabilities
4,800,000
Long-term debt
Equity
$5,520,000 Total liabilities and equity
$ 938,400
1,900,000
2,681,600
$5,520,000
If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will
Gyp Sum need from external sources to fund the expected growth? (Enter your answer in dollars not in
millions. Negative amount should be indicated by a minus sign.)
Transcribed Image Text:Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.2 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent, and expects sales of $7.2 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed $ 720,000 Current liabilities 4,800,000 Long-term debt Equity $5,520,000 Total liabilities and equity $ 938,400 1,900,000 2,681,600 $5,520,000 If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from external sources to fund the expected growth? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.)
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