The Smith Co., which is currently operating at full capacity, has sales of $3,000, current assets of $800, current liabilities of $400, net ﬁxed assets of $1,900, and a 6% proﬁt margin. The ﬁrm has no
Long-term debt and does not plan on acquiring any. The ﬁrm does not pay any dividends. Sales are
Expected to increase by 9% next year. If all assets, liabilities, and costs vary directly with sales, how
Much additional equity ﬁnancing is required for next year?
A) $10.80
B) $40.00
C) $103.50
D) $196.20
E) $207.00

Question

Quizplus · Accepted Answer

The Answer of The Smith Co., which is currently operating at full capacity, has sales of $3,000, current assets of $800, current liabilities of $400, net ﬁxed assets of $1,900, and a 6% proﬁt margin. The ﬁrm has no
Long-term debt and does not plan on acquiring any. The ﬁrm does not pay any dividends. Sales are
Expected to increase by 9% next year. If all assets, liabilities, and costs vary directly with sales, how
Much additional equity ﬁnancing is required for next year?
A) $10.80
B) $40.00
C) $103.50
D) $196.20
E) $207.00