You are estimating your company's external financing needs for the next year.At the end of the year you expect that owners' equity will be $80 million,total assets will amount to $170 million,and total liabilities will be $70 million.How much will your firm need to borrow,or otherwise acquire,from outside sources during the year?
A) $20 million
B) $70 million
C) $150 million
D) $160 million
E) $180 million

Question

Quizplus · Accepted Answer

The firm's external financing needs can be calculated by subtracting the total liabilities and owners' equity from the total assets. Given that total assets are expected to be $170 million, and the sum of total liabilities ($70 million) and owners' equity ($80 million) is $150 million, the difference is $20 million. This means the firm will need to acquire $20 million from outside sources during the year.

You Are Estimating Your Company's External Financing Needs for the Next