How many dollars of new funds are needed to finance

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Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.

Balance Sheet
(in $ millions)

Assets

Liabilities and Stockholders' Equity

Cash  $2

Accounts payable $16

Accounts receivable 22

Accrued wages 4

Inventory 24

Accrued taxes 10

Current assets $48

Current liabilities $30

Fixed assets 43

Notes payable 12

Common stock 17

Retained earnings 32

Total assets $91

Total liabilities and stockholders' equit y$91

Owen's Electronics has an aftertax profit margin of 6 percent and a dividend payout ratio of 45 percent.

Problem 1:
If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)

Reference no: EM132684466

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