Assume the following facts about a firm: $\begin{array}{lr}
\text { Sales } _ {this year }&\$200,000\
\text { Net income }_ {this year }&\$30,000\
\text { Assets }_ {this year }&\$100,000\
\text { Current liabilities }_ {this year }&\$10,000\\text { Anticipated growth rate }&10\%\
\text { Proposed dividend payout ratio }&40\%
\end{array}$
The firm's external funding requirement for next year is
(Hint: You don't have to remember the EFR formula. Just realize that the funding requirement is the growth in assets less that in current liabilities less next year's retained earnings. A negative result means surplus funds are available.)

Question

Assume the following facts about a firm: $\begin{array}{lr}
\text { Sales } _ {this year }&\$200,000\
\text { Net income }_ {this year }&\$30,000\
\text { Assets }_ {this year }&\$100,000\
\text { Current liabilities }_ {this year }&\$10,000\\text { Anticipated growth rate }&10\%\
\text { Proposed dividend payout ratio }&40\%
\end{array}$
 The firm's external funding requirement for next year is
(Hint: You don't have to remember the EFR formula. Just realize that the funding requirement is the growth in assets less that in current liabilities less next year's retained earnings. A negative result means surplus funds are available.)

Quizplus · Accepted Answer

The external funding requirement is calculated as the growth in assets ($10,000) minus the growth in current liabilities ($1,000) minus next year's retained earnings ($18,000), resulting in a surplus of ($10,800).

Assume the Following Facts About a Firm The Firm's External Funding Requirement for Next Year Is (Hint

Assume the Following Facts About a Firm The Firm's External Funding Requirement for Next Year Is
(Hint