Suppose that TV Industries, Inc. currently has the balance sheet shown as follows, and that sales for the year just ended were $5 million. The firm also has a profit margin of 15 percent, a retention ratio of 25 percent, and expects sales of $5.5 million next year. If all assets and current liabilities are expected to increase with sales, what amount of additional funds will the company need from external sources to fund the expected growth? Assets Liabilities and Equity Current assets $ 1,000,000 Current liabilities $ 1,000,000 Fixed assets 2,000,000 Long-term debt 1,000,000 Equity 1,000,000 Total assets $ 3,000,000 Total liabilities and equity $ 3,000,000
Suppose that TV Industries, Inc. currently has the balance sheet shown as follows, and that sales for the year just ended were $5 million. The firm also has a profit margin of 15 percent, a retention ratio of 25 percent, and expects sales of $5.5 million next year. If all assets and current liabilities are expected to increase with sales, what amount of additional funds will the company need from external sources to fund the expected growth? Assets Liabilities and Equity Current assets $ 1,000,000 Current liabilities $ 1,000,000 Fixed assets 2,000,000 Long-term debt 1,000,000 Equity 1,000,000 Total assets $ 3,000,000 Total liabilities and equity $ 3,000,000
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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Suppose that TV Industries, Inc. currently has the
| Assets | Liabilities and Equity | ||||||
| Current assets | $ | 1,000,000 | Current liabilities | $ | 1,000,000 | ||
| Fixed assets | 2,000,000 | Long-term debt | 1,000,000 | ||||
| Equity | 1,000,000 | ||||||
| Total assets | $ | 3,000,000 | Total liabilities and equity | $ | 3,000,000 | ||
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