Addition to retained earnings and current assets

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Reference no: EM131919571

In 2016. Company ABC reported revenue of $16,000,000, net income of $800,000 and dividends of $400,000. ABC expects that revenues will increase to $20,000,000 in 2017. The net margin ratio (net income/revenue) and the dividend payout ratio (dividends/net income) in 2016 will not change in 2017 (you can use the 2016 ratios to answer the questions below). In 2016, ABC’s Total assets consisted of marketable securities of $2,000,000, accounts receivable of $8,000,000, and equipment of $2,000,000 (which was at 80% capacity). Total liabilities consisted of accounts payable of $1,000,000, short-term notes payable of $1,000,000, and long-term debt of $2,000,000. Owner’s Equity was $8,000,000, and consisted of common stock of $4,000,000 and retained earnings of $4,000,000. Calculate the following for 2017: Addition to Retained Earnings (ADRE), Current Assets, Current Liabilities, Owner’s Equity, and External Financing Needed (EFN).

Reference no: EM131919571

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