Whether it would be ethical for Company to turn down person G’s proposal by keeping the plant indefinitely for preserving their employees.

Question

Petal Providers Corporation, described in Problem 1, is interested in estimating its additional financing needs to support a rapid increase in sales next year. Last year revenues were $1 million, the net profit was $50,000, the investment in assets was $750,000, payables and accruals were $100,000, and equity at the end of the year was $450,000. The venture did not pay out any dividends and does not expect to pay dividends for the foreseeable future. A. What would be your estimate of the additional funds needed next year to support a 30 percent increase in sales? B. How would your answer in Part A change if the expected sales growth were only 15 percent?

Answer 1

Question

Chapter 2, Problem 6Q

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To discuss: Whether it would be ethical for Company to turn down person G’s proposal by keeping the plant indefinitely for preserving their employees.

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