Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $6.6 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent and expects sales of $8.6 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. Liabilities and Equity Assets Current assets Fixed assets Total assets. $1,584,000 Current liabilities 4,356,000 Long-term debt Equity $5,940,000 Total liabilities and equity Additional funds needed $ 2,178,000 1,700,000 2,062,000 $5,940,000 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.
Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $6.6 million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent and expects sales of $8.6 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. Liabilities and Equity Assets Current assets Fixed assets Total assets. $1,584,000 Current liabilities 4,356,000 Long-term debt Equity $5,940,000 Total liabilities and equity Additional funds needed $ 2,178,000 1,700,000 2,062,000 $5,940,000 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.
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
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Transcribed Image Text:Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the year just ended were $6.6
million. The firm also has a profit margin of 30 percent and a retention ratio of 20 percent and expects sales of $8.6 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.
Liabilities and Equity
Assets
Current assets
Fixed assets
Total assets
$ 1,584,000 Current liabilities
4,356,000
Additional funds needed
Long-term debt
Equity
$ 5,940,000 Total liabilities and equity
$ 2,178,000
1,700,000
2,062,000.
$5,940,000
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.
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Step 1: Formula.
VIEWStep 2: Computation of Increase in current assets.
VIEWStep 3: Computation of Increase in fixed assets.
VIEWStep 4: Computation of Increase in Spontaneous liabilities .
VIEWStep 5: Computation of Increase in retained earnings.
VIEWStep 6: Computation of Additional funds needed.
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