Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $20 million. The firm also has a profit margin of 22 percent, a retention ratio of 42 percent, and expects sales of $30 million next year. If all assets and current liabilities are expected to grow with sales, how much additional funds will Gyp Sum need from external sources to fund the expected growth?
A) $3,925,000
B) $3,695,000
C) $4,124,000
D) $4,478,000

Question

Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $20 million. The firm also has a profit margin of 22 percent, a retention ratio of 42 percent, and expects sales of $30 million next year. If all assets and current liabilities are expected to grow with sales, how much additional funds will Gyp Sum need from external sources to fund the expected growth? 
A) $3,925,000 
B) $3,695,000 
C) $4,124,000 
D) $4,478,000

Quizplus · Accepted Answer

The Answer of Suppose that Gyp Sum Industries currently has the balance sheet shown below, and that sales for the year just ended were $20 million. The firm also has a profit margin of 22 percent, a retention ratio of 42 percent, and expects sales of $30 million next year. If all assets and current liabilities are expected to grow with sales, how much additional funds will Gyp Sum need from external sources to fund the expected growth? 
A) $3,925,000 
B) $3,695,000 
C) $4,124,000 
D) $4,478,000

Suppose That Gyp Sum Industries Currently Has the Balance Sheet