Problem A:
United Products Inc. has the following balance sheet:
|
Current assets
|
$5,000
|
Accounts payable
|
$1,000
|
|
|
|
Notes payable
|
1,000
|
|
Net fixed assets
|
5,000
|
Long-term debt
|
4,000
|
|
|
|
Common equity
|
4,000
|
|
Total assets
|
$10,000
|
Total liabilities and equity
|
$10,000
|
Business has been slow; therefore, fixed assets are vastly underutilized. Management believes it can double sales next year with the introduction of a new product. No new fixed assets will be required, and management expects that there will be no earnings retained next year. What is next year's additional funding requirement?