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    Percent of Sales Method for external financing

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    Assume a firm has total assets of $15,580,000, current liabilities of $4,261,000, long term debt of $3,638,000, and net worth of $7,681,000. Also, assume the firm has net sales of $12,250,000, net profit of $692,000, and dividends of $429,000. Further assume that management expects sales to increase by $2.75 million during the coming year, making the expected level of sales equal to $15 million.

    Using the percent of sales method, calculate the increase in total assets, increase in current liabilities, increase in retained profit and calculate net external finance needed.

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    https://brainmass.com/business/sales-revenue/percent-sales-method-external-financing-466463

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    Percent of Sales Method
    Assume a firmhas total assets of $15,580,000;current liabilities of $4,261,000; long term debt of $3,638,000; and net worth of $7,681,000. Also assume the firm has net sales of $12,250,000; net profit of $692,000; and dividends of $429,000. Further assume that management expects sales to increase by $2.75 million during the coming year, mkaing the ...

    Solution Summary

    The solution discusses the Percent of Sales Method. Net external finance needed are provided.

    $2.19