T. Jarmon, Inc. has been in business for 1 year, and the CFO expects that the relationship
Question:
T. Jarmon, Inc. has been in business for 1 year, and the CFO expects that the relationship between firm sales and its operating expenses, current assets, its assets, and current liabilities will remain at their current proportion of sales.
Last year Jarmon had $18,400,000 in sales and net income of $552,000. The firm anticipates that next year’s sales will reach $21,160,000, with net income rising to $634,800. Given its present high rate of growth, the firm retains all its earnings to help defray the cost of new investments.
The firm’s balance sheet for 2018 is shown in the following table:
Using the information provided above make an estimate of Jarmon’s financing requirements or total assets for 2019 and its discretionary financing needs (DFN).
Step by Step Answer:
Foundations Of Finance
ISBN: 9780135160619
10th Edition
Authors: Arthur J. Keown, John H. Martin, J. William Petty