What amount of additional funds will wall-e need from source

Assignment Help Financial Management

Reference no: EM132020042

Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.2 million.

The firm also has a profit margin of 30 percent, a retention ratio of 20 percent, and expects sales of $9.2 million next year.

Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments.

Assets Liabilities and Equity Current assets $ 2,088,000

Current liabilities $ 2,448,000

Fixed assets 5,112,000

Long-term debt 1,600,000

Equity 3,152,000

Total assets $ 7,200,000

Total liabilities and equity $ 7,200,000

If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth?

(Enter your answer in dollars not in millions.) Additional funds needed $

Reference no: EM132020042

Questions Cloud

What does your value function look like graphically : Your friend the Joker gives you two newly issued dollar coins on your birthday. In terms of value, how much did you just gain?

The expected return-beta relationship in this economy : Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 8%, and all stocks have independent firm-specific components.

Provide the quote with required convention fixed maturity : Suppose you want to provide a quote for a Treasury bond that matures in 2 years and pays semi-annual coupons of 3%.

Identify your best guess for the rate of return on the stock : If industrial production actually grows by 7%, while the inflation rate turns out to be 8%, what is your best guess for the rate of return on the stock?

What amount of additional funds will wall-e need from source : If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund?

What proportion of your portfolio must be invested in asset : Suppose that you want to create a portfolio that includes two assets, X and Y. The standard deviations of X and Y are 9% and 0% respectively.

Calculate the required return on equity for this firm : Swamp & Sand's current dividend is $1.7 per share. Analysts expect the firm's growth rate of 7% per year to continue indefinitely.

Will premiums on interest rate floors on 3-month libor be : Suppose that the yield curve on Eurodollars is sharply upward sloping 1. Will premiums on interest rate floors on 3-month LIBOR be high or low? Explain

How much did you overpay becasue of dealer financing : Suppose that you find out that given your credit, you should have only been charged an EAR of 3%. How much did you overpay becasue of dealer financing?

User Account

All Pages