Company is forecasting a percent increase in sales

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Reference no: EM13101874

Orange & Sons recently reported sales of $100 million as well as net income equal to $5 million. The company has $70 million in total assets. Over the next year the company is forecasting a 20 percent increase in sales. Since the company is at full capacity its assets should increase in proportion to sales. The company as well estimates that if sales increase 20 percent, spontaneous liabilities will rise by $2 million. If the company's sales increase its profit margin will continue at its current level. The company's dividend pay-out ratio is 50 percent. Based on the AFN formula how much additional capital should the company raise in order to support the 20 percent increase in sales

Reference no: EM13101874

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