Reference no: EM132845496
Question - Owen's Electronics has nine operating plants in seven south western 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 $13 Accounts payable $24
Accounts receivable 29 Accrued wages 11
Inventory 30 Accrued taxes 15
Current assets $72 Current liabilities $50
Fixed assets 47 Notes payable 19
Common stock 22 Retained earnings 28
Total assets $119 Total liabilities and stockholders' equity $119
Owen's Electronics has an aftertax profit margin of 6 percent and a dividend payout ratio of 40 percent.
If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth.