Suppose that Wind Em Corporation currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets? Assets Current assets Fixed assets Total assets Multiple Choice $100,000 $250,000 $750,000 $500,000 Liabilities and Equity $ 500,000 250,000 $750,000 Current liabilities Long-term debt Equity Total liabilities and equity $ 200,000 300,000 250,000 $750,000
Suppose that Wind Em Corporation currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets? Assets Current assets Fixed assets Total assets Multiple Choice $100,000 $250,000 $750,000 $500,000 Liabilities and Equity $ 500,000 250,000 $750,000 Current liabilities Long-term debt Equity Total liabilities and equity $ 200,000 300,000 250,000 $750,000
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
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Transcribed Image Text:Suppose that Wind Em Corporation currently has the balance sheet shown as follows, and that sales for the
year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20
percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with
sales, what is the necessary increase in assets?
Assets
Current assets
Fixed assets
Total assets
Multiple Choice
$100,000
$250,000
$750,000
$500,000
Liabilities and Equity
$ 500,000
250,000
$ 750,000
Current liabilities
Long-term debt
Equity
Total liabilities and equity
$ 200,000
300,000
250,000
$ 750,000
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