Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $7.9 million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent and expects sales of $9.9 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 assets $ 2,844,000 Fixed assets Liabilities and Equity 5,214,000 Current liabilities Long-term debt Equity $ 2,133,000 1,950,000 3,975,000 Total assets $ 8,058,000 Total liabilities and equity $ 8,058,000 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? Note: Enter your answer in dollars not in millions. Round your answer to the nearest whole dollar. Additional funds needed
Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $7.9 million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent and expects sales of $9.9 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 assets $ 2,844,000 Fixed assets Liabilities and Equity 5,214,000 Current liabilities Long-term debt Equity $ 2,133,000 1,950,000 3,975,000 Total assets $ 8,058,000 Total liabilities and equity $ 8,058,000 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? Note: Enter your answer in dollars not in millions. Round your answer to the nearest whole dollar. Additional funds needed
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
Related questions
Question
Vijay
Transcribed Image Text:Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $7.9
million. The firm also has a profit margin of 25 percent and a retention ratio of 30 percent and expects sales of $9.9 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 assets $ 2,844,000
Fixed assets
Liabilities and Equity
5,214,000
Current liabilities
Long-term debt
Equity
$ 2,133,000
1,950,000
3,975,000
Total assets
$ 8,058,000 Total liabilities and equity
$ 8,058,000
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?
Note: Enter your answer in dollars not in millions. Round your answer to the nearest whole dollar.
Additional funds needed
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education