Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount after taxes. The firm is currently in the process of projecting its financing needs and has made the following assumptions (projections):
1. Current assets are equal to 20 percent of sales, and fixed assets remain at their current level of $1 million.
2. Common equity is currently $0.8 million, and the firm pays out half of its after-tax earnings in dividends.
3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long-term debt outstanding. What are Sambonoza’s financing needs for the coming year?