Answered: To the nearest whole dollar, what…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 17P: The Raattama Corporation had sales of $3.5 million last year, and it earned a 5% return (after...

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Question

Bottling's December 31st balance sheet is given below:

      Cash                      10       Accounts payable        $ 15
Accounts receivable   25       Notes payable                   20
      Inventory               40       Accrued wages and taxes 15
      Net fixed assets    75       Long-term debt                   30
                                               Common equity              70
                                                     Total liabilities
       Total assets       $150          and equity                  $150

Sales during the past year were $100, and they are expected to rise by 50 percent to $150 during next year. Also, during last year fixed assets were being utilized to only 85 percent of capacity (excess capacity). Assume that profit margin will remain constant at 5 percent and that the company will continue to pay out 60 percent of its earnings as dividends. To the nearest whole dollar, what amount of nonspontaneous, additional funds will be needed during the next year (use percentage sales based proforma method)?

Group of answer choices

$48

$57

$36

$40

$51

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