Problem:
See below the 2006 balance sheet for Marbell Inc.
Assets Liabilities & Stockholders' Equity
Cash $15,000 Accts Payable $90,000
Accts. Rec. 90,000 Notes Payable 30,000
Inventory 60,000 Accrued expenses 7,500
Current Assets 165,000 Current Liabilities 127,500
Fixed assets 60,000 Common Stock 75,000
Retained earnings 22,500
Total Liabilities + S.E. Equity $225,000
Sales for 2006 were $300,000. Sales for 2007 have been projected to increase by 20%.
Assuming that Marbell Inc. is operating below capacity, calculate the amount of new funds required to finance this growth. Marbell has an 8% return on sales and 70% is paid out as dividends. Show all work and explain.
Percent of Sales Table
Cash Accts. Payable
Accts. Rec. Accrued expenses
Inventory
Current assets Current Liabilities
(spontaneous) (spontaneous)
New Sales Level =
New funds required =
Use MS Word for response.