Question

Sales revenue is forecasted to grow by 13% next year, forecasted net income is expected to be $30,000, and all current assets and current liabilities vary proportionally with sales. If $45,000 worth of net noncurrent assets are required to be purchased next year, what is the external financing needed

Answer 1

17,320.5

Step-by-step explanation:

Calculation to determine the external financing needed

Using this formula

External Financing Needed = Increase in current assets+Increase in non current assets-Increase in spontaneous liabilities -Retained earnings

External Financing Needed = (42,500*13%)+45,000-(24,650*13%)-30000

External Financing Needed = 5,525+45,000-3,204.5-30,000

External Financing Needed =17,320.5

Therefore the external financing needed will be

17,320.5