What is the dicretionary funding need

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KingPie projects its sales net year to be $4 million and expects to earn 5 percent of that amount after taxes. the firm is currently in the process of projecting its financing needs and has made the following assumptions (projections):

1. Current assets are equal to 20% of sales and fixes assets remain at their current level of 1 million
2. Common equity is currently $0.8 million, and the firm pays out half of its after-tax earning in dividends.
3. the firm has short-term payable and trade credit that normally equal 10% of sales, and its has no long-term debt outstanding.

What are KingPies financing needs for the coming year?

TIP: complete the balance sheet using the percentage of sales assumptions to solve.

What is the dicretionary funding need?

What is the total financing needed to operate next year (sum)?

 

Reference no: EM13284815

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