Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.9 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent, and expects sales of $7.9 million next year. AssetsLiabilities and EquityCurrent assets$ 1,741,000Current liabilities$ 1,401,840Fixed assets4,100,000Long-term debt1,550,000 Equity2,889,160Total assets$ 5,841,000Total liabilities and equity$ 5,841,000 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?
Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.9 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent, and expects sales of $7.9 million next year. AssetsLiabilities and EquityCurrent assets$ 1,741,000Current liabilities$ 1,401,840Fixed assets4,100,000Long-term debt1,550,000 Equity2,889,160Total assets$ 5,841,000Total liabilities and equity$ 5,841,000 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?
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 6P
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Question
Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.9 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent, and expects sales of $7.9 million next year.
AssetsLiabilities and EquityCurrent assets$ 1,741,000Current liabilities$ 1,401,840Fixed assets4,100,000Long-term debt1,550,000 Equity2,889,160Total assets$ 5,841,000Total liabilities and equity$ 5,841,000
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?
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