If all assets and current liabilities are expected to
Course:- Accounting Basics
Reference No.:- EM13601533

Assignment Help
Assignment Help >> Accounting Basics

Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $10 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent, and expects sales of $8 million next year.

Assets Liabilities and Equity

  • Current assets $ 2,000,000 Current liabilities $ 1,500,000
  • Fixed assets 4,000,000 Long-term debt 1,500,000
  • Equity 3,000,000

Total assets $ 6,000,000 Total liabilities and equity $ 6,000,000

If all assets and current liabilities are expected to shrink with sales, what amount of additional funds will Gyp Sum need from external sources to fund the expected growth?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Montana Company was started on January 1, 2013, when it acquired $50,000 cash from the owners. During 2013, the company earned cash revenues of $25,000 and incurred cash expen
He has orally assured Terri that he will pay off the account receivable within the next year. Terri reported the $100,000 in the same manner on the preceding year's balance
Anibonita Company began operations in 2010. It sells goods on installment sales contracts; these transactions are considered to be exceptional, so it uses the installment meth
On January 1, Jenny Company sells goods that have a cost of $400,000 to Denny Inc. for $550,000, with payment due in 1 year. The cash price for these goods is $450,000, with
Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011,
Create an argument for allowing a loss on a sales transaction between a controlled corporation and shareholder when the transaction includes an independent appraisal and the
Thomas receives a yearly salary of $90,000, plus an annual bonus, from MGM. The annual bonus is determined in December of each year but not paid until January of the foll
Why is it important to properly value a business's assets and how does asset valuation impact the financial statements of an organization?