Solution-Sources to fund the expected growth

Sources to fund the expected growth

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Reference no: EM131862096

Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $10.5 million. The firm also has a profit margin of 30 percent, a retention ratio of 20 percent, and expects sales of $8.5 million next year.

Assets

Liabilities and Equity

Current assets

$2,325,000

Current liabilities

$2,047,500

Fixed assets

4,500,000

Long-term debt

1,750,000

Equity

3,027,500

Total assets

$6,825,000

Total liabilities and equity

$6,825,000

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? (Enter your answer in dollars not in millions. Negative amount should be indicated by a minus sign.)

Additional Funds Needed ______________________________________________

Reference no: EM131862096

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Sources to fund the expected growth

Reference no: EM131862096

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