The most recent financial statements for Watchtower,Inc.are shown here (assuming no income taxes): Assets and costs are proportional to sales.Debt and equity are not.No dividends are paid.Next year's sales are projected to be $4,750.What is the amount of the external financing needed?

Question

The most recent financial statements for Watchtower,Inc.are shown here (assuming no income taxes):  Assets and costs are proportional to sales.Debt and equity are not.No dividends are paid.Next year's sales are projected to be $4,750.What is the amount of the external financing needed?

Quizplus · Accepted Answer

Sales increase = ($4,750 - $3,800)/$3,800 = 0.25 New equity = $3,277 + $1,470 = $4,747External financing need = $11,387.50 - $4,747 - $5,833 = $807.5

The Most Recent Financial Statements for Watchtower,Inc