Barnes Company has highly seasonal sales and financing requirements.Barnes has made the following projections of its asset needs and net additions to retained earnings over the next year (in $ million).

Net worth (equity) at the beginning of the year is $50 million.The company does not plan to sell any new equity during the coming year.Assume that Barnes follows a matching approach to finance its assets, i.e., long-term debt and equity are used to finance fixed and permanent current assets and short-term debt is used to finance fluctuating current assets.Determine the amount of long-term and short-term debt respectively outstanding at the end of the third quarter ($ million).

Question

Barnes Company has highly seasonal sales and financing requirements.Barnes has made the following projections of its asset needs and net additions to retained earnings over the next year (in $ million).

Net worth (equity) at the beginning of the year is $50 million.The company does not plan to sell any new equity during the coming year.Assume that Barnes follows a matching approach to finance its assets, i.e., long-term debt and equity are used to finance fixed and permanent current assets and short-term debt is used to finance fluctuating current assets.Determine the amount of long-term and short-term debt respectively outstanding at the end of the third quarter ($ million).

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Barnes Company Has Highly Seasonal Sales and Financing Requirements