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Question
You are the owner of a small business which has the following balance sheet:
Current assets $ 5,000 Accounts payable $ 1,000
Net fixed assets 10,000 Accruals 1,000
Long-term debt 5,000
Common equity 8,000
Total assets $15,000 Total $15,000
Fixed and current assets are fully utilized, and the sales/assets and sales/spontaneous liabilities ratios will remain constant. Next year you expect sales to increase by 50 percent. You also expect to retain $2,000 of next year's earnings within the firm. What is next year's additional external funding requirement, i.e., what is your firm's AFN?
a. No additional funds are required.
b. $3,500
c. $4,500
d. $5,500
e. The answer depends on this year's sales level.
Answer
This answer is hidden. It contains 240 characters.
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