Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $9.4 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments. Assets Current Liabilities and Equity $2,294,000 Current liabilities assets Fixed assets 5,402,000 Long-term debt Equity Total assets $7,696,000 Total llabilities and equity $2,368,000 1,700,000 3,628,000 $7,696,000 If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.)
Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.4 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $9.4 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments. Assets Current Liabilities and Equity $2,294,000 Current liabilities assets Fixed assets 5,402,000 Long-term debt Equity Total assets $7,696,000 Total llabilities and equity $2,368,000 1,700,000 3,628,000 $7,696,000 If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales
for the year just ended were $7.4 million. The firm also has a profit margin of 20 percent,
a retention ratio of 25 percent, and expects sales of $9.4 million next year. Fixed assets
are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must
be added in $1 million increments.
Assets
Current
$2,294,000 Current liabilities
Long-term debt
Equity
assets
Fixed assets 5,402,000
Liabilities and Equity
Total assets $7,696,000
Total liabilities and
equity
$2,368,000
1,700,000
3,628,000
$7,696,000
If current assets and current liabilities are expected to grow with sales, what amount of
additional funds will Wall-E need from external sources to fund the expected growth?
(Enter your answer in dollars not in millions.)
Additional funds needed
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