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momneedinghelp
Nov 8, 2009, 08:31 AM
Electric Chair and Table Co. expects sales next year to be $10,000,000. Inventory
And accounts receivable will increase by $1,400,000 and accounts payable will
Increase by $300,000. The company has a profit margin of 9 percent and pays
Out 30 percent of profits in dividends. How much external financing will be nec-
Essary? Assume there is no increase in liabilities other than that which will occur
With the external financing.

haider78605
Nov 8, 2009, 02:40 PM
Inventory plus Account receivable =$1700000
less proft retaiend
10000000 x 9%(1-.3) =$ 630000
External financing will be needed = $1070000