Problem 15-3 Additional Funds Needed (LG15-4)Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.5million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent, and expects sales of $7.5 million next year.AssetsCurrent assetsFixed assetsTotal assetsAdditional funds neededLiabilities and Equity$ 725,000 Current liabilities4,500,000Long-term debtEquityTotal liabilities and equity $5,225,000$ 5,225,000$ 1,045,0001,750,0002,430,000If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from externalsources to fund the expected growth?Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.

Increase in Assets = Assets * (Sales, Next Year - Sales Last Year / Sales, Last Year)= $5,225,000 *…

Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.5 million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent, and expects sales of $7.5 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed $ 725,000 Current liabilities 4,500,000 Long-term debt $ 5,225,000 $ 1,045,000 1,750,000 2,430,000 Equity Total liabilities and equity $ 5,225,000 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? Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.

Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $9.5 million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent, and expects sales of $7.5 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed $ 725,000 Current liabilities 4,500,000 Long-term debt $ 5,225,000 $ 1,045,000 1,750,000 2,430,000 Equity Total liabilities and equity $ 5,225,000 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? Note: Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter9: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 6P: Additional Funds Needed The Booth Company’s sales are forecasted to double from $1,000 in 2018 to...

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