Suppose that Wind Em Corporation currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets? Assets Current assets Fixed assets Total assets Multiple Choice $100,000 $250,000 $750,000 $500,000 Liabilities and Equity $ 500,000 250,000 $750,000 Current liabilities Long-term debt Equity Total liabilities and equity $ 200,000 300,000 250,000 $750,000

Suppose that Wind Em Corporation currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets? Assets Current assets Fixed assets Total assets Multiple Choice $100,000 $250,000 $750,000 $500,000 Liabilities and Equity $ 500,000 250,000 $750,000 Current liabilities Long-term debt Equity Total liabilities and equity $ 200,000 300,000 250,000 $750,000

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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