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Determine the amount of additional financing

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Suppose you new business had sales of $1 million last year using and its total assets of $0.6 million, accounts payable was $0.2 million and common stock and retained earnings were $0.2 million. You are forecasting sales this year to be $1.2 million with earnings after tax expected to be only 2% of sales, and dividends of $50,000 are expected to be paid. Assuming that the ratio of assets to sales and current liabilities to sales remain the same this year as last year, determine the amount of additional financing (AFN) required and explain what the derived number means.

Reference no: EM132796658

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