Sales increase. Plerce Furnishings generated 52 million sales during 2012, and i

Question

Sales increase. Plerce Furnishings generated 52 million sales during 2012, and its year-end total assets were 51.6 million. Also, at year-end 2012, current liabilites were $ 500,00, concking of $ 200.00 of notes payable, $ 200,000 of accounts payable, and $100,000 of account liabilites. Looking shead to 2013, the estimates that its assents must increase by $0.80 for every $1.00 Increase in sales. Parece's profit margin is 7% , and its retention ratio is 60%. How large of a sales in increase can the company achieve with out having to raise funds externally? Write but your answer completely. For example , 25 million should be entered as 25,000,00. Round your answer to the nearest cent.

Explanation / Answer

Total Assets 1600000 Current Liabilities Amount Affected By Sales Notes Payable 200000 0 Accounts Payable 200000 200000 Accrued Liabilities 100000 100000 Total Liability 500000 300000 2013 Increase in assets for every $1 increase; (A/S0) 0.8 Profit Margin (M) 7% Retention Ratio (d) 60% AFN= (A/S0)*)S-(L/S0)*S-M*S1(1-d) 0.80S-(300000/2000000)*S-0.07(1-0.6) 0.80S-0.15S-0.028 S1 0.65S-0.028S1 0.65(S1-S0)-(0.028 S1) 0.65(S1-2000000)-(0.028 S1) 0.65 S1-1300000-0.028 S1 0.622 S1= 1300000 S1= 2090032 Increase in Sales Sales 2013 (S1) $2,090,032 Sales 2012 (S2) $2,000,000 Increase in Sales $90,032

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