Explore BrainMass

Explore BrainMass

    External Financing Needed

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Tobin Supplies Company expects sales next year to be $500,000. Inventory and accounts receivable will increase $90,000 to accommodate this sales level. The company has a steady profit margin of 12 percent with a 40 percent dividend payout. How much external financing will Tobin Supplies Company have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.

    © BrainMass Inc. brainmass.com June 3, 2020, 9:14 pm ad1c9bdddf
    https://brainmass.com/business/finance/external-financing-needed-172511

    Solution Preview

    External financing needed = Increase in assets - increase in spontaneous liabilities - retained ...

    Solution Summary

    The solution explains how to calculate the amount of external financing needed given the increase in sales

    $2.19

    ADVERTISEMENT