Fauquier Resources Inc.’s current revenue is $20 million, and the sales and marketing department expects that it will reach $30 million by next year. At the moment, trade receivables are $3.5 million; inventories, $4.5 million; and non-current assets, $6 million. The company expects these assets to increase at the same percentage rate as that of revenue.
Based on his calculations, the treasurer anticipates a $2.5 million increase in the company’s cash balance and that trade and other payables will increase from $5 million to $7 million. According to the company’s operational plans, the pre-tax profit for the year is expected to reach $4 million, and the board of directors has approved a $1.5 million dividend payout. The company’s income tax rate is 40%.

Will the company require any external cash flows next year? If yes, how much?

  • CreatedDecember 03, 2014
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