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
Preparation of a Schedule of Cost of Goods Manufactured and Cost of Goods Sold. (The schedules may be in the appendix). Explain why some items have been excluded from the sc
Mary received a liquidating distribution from ABC Corporation as part of the complete liquidation of ABC Corporation. Mary's basis for her ABC Corporation stock was $10,000.
What are the different measures of the Pension Obligation. What are the similarities/differences between these methods and why is the Projected Benefit Obligation FASB's cho
In 2015, Christian wants to transfer as much as possible to his 8 adult married children (including spouses) and 13 minor grandchildren without using any unified transfer ta
Trading stamps. A trading stamp company wished to estimate the proportion p,) of stamps that will eventually be redeemed. Specially marked stamps were simultaneously release
Bonds payable with a par value of $900,000, which are dated January 1, 2014, are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annu
Norman Co., a fast-growing golf equipment company, uses U.S. GAAP. It is considering the issuance of convertible bonds. The bonds mature in 10 years, have a face value of $400
Complete this case involving Adelphia Communications, available online in the Connect library. By completing the requirements of this case, which ask you to explain how accoun