Reference no: EM132956539

Wise Corporation is trying to determine the additional funds needed to support its forecasted sales next year. The followings are the partial financial statement for the year ended in 2020.

Wise Corporation
Partial Statement of Financial Position for the year ended in 2020
Liabilities and Equities (RM)
Trade payable 320,000
Long term debt 750,000
Common stock 800,000
Capital surplus 400,000
Retained earnings 120,000
Total Liabilities and equities 2,390,000

Additional information for 2020:
Net income RM621,400
Dividend distributed to shareholders RM434,980
Total asset turnover 65%

Problem 1: Wise Corporation estimates that sales in 2021 will increase by RM932,100. Besides, it also decided to maintain its current net profit margin and dividend payout ratio for 2021. The total assets and trade payable are estimated to increase spontaneously with sales.
Given the above information, calculate the sales amount and estimate the additional financing needed by Wise Corporation in 2021. Show your workings.

Problem 2: Explain the advantage of using short-term financing if the company decides to use it as an external source