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Sales increase can be handled by existing fixed assets

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Reference no: EM131255372

Austin Boston corporation's balance sheet for last year is present below:

Cash                           $   400,000                     Accounts payable       $1,500,000

accounts receivable      2,000,000                    Notes payable               1,000,000

Inventory                       3,000,000                    Mortgage                      2,500,000

Fixed assets                 3,600,000                    Common stock             2,500,000

                                                                          Retained earnings       1,500,000

Total Assets                $9,000,000                 Total liabilities & equity   $9,000,000

Sales last year were $10,000,000 and they are expected to increase by 20 percent next year. Net profit margin is forecasted to be 8%. Austin Boston plans to pay dividends of 60%. Management expects that the sales increase can be handled by existing fixed assets. How much external funds does Austin Boston need next year?

Reference no: EM131255372

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