Urban\'s, which is currently operating at full capacity, has sales of $47,000, c

Question

Urban's, which is currently operating at full capacity, has sales of $47,000, current assets of $5,100, current liabilities of $6.200, net fixed assets of $51,500, and a profit margin of 5 percent The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to Increase by 3 percent next year. If all assets, short-term liablities, and costs vary directly with sales, how much additional equity financing is required for next year? Multiple Cholce $908.50 -$722.50 $967.30 $1.698.00 $1512.00

Explanation / Answer

Sales $47,000 Current assets $5,100 Current Liabilities $6,200 Net Fixed assets $51,500 Profit Margin 5% Projected assets (5100+51500)*1.03% = 58298 Projected Liabilities - 6200*1.03 = 6386 Current Equity = 51500+5100-6200 = 50400 Increase in retained earnings - 47000*1.03*5% - 2420.50 Equity Funding needed = 58298-6386-50400-2420.50 =-908.50 Additional Equity Financing required for next year is -908.5

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.