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    momneedinghelp's Avatar
    momneedinghelp Posts: 5, Reputation: 1
    New Member
    		  
    #1

    Nov 8, 2009, 08:31 AM
    Accounting
    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's Avatar
    haider78605 Posts: 61, Reputation: 1
    Junior Member
    		  
    #2

    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
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