Suppose that Wall-E Corp. currently has the following balance sheet, and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $9 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E’s fixed assets is such that they must be added in $1 million increments. If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expectedgrowth?
Answer to relevant QuestionsJohn’s Bait and Fish shop has had the monthly sales amounts listed as follows for the last four years. Assuming that there is both seasonality and a trend, estimate monthly sales for each month of the comingyear.How will passive and active capital structure changes differ? Daddi Mac, Inc., doesn’t face any taxes and has $350 million in assets, currently financed entirely with equity. Equity is worth $37 per share, and book value of equity is equal to market value of equity. Also, let’s ...If a firm announces a dividend decrease, would you expect the stock price to go down more or less than the present value of that decrease? Why? Kenzie Cos. is expected to pay a dividend of $2.75 per year indefinitely. If the appropriate rate of return on this stock is 16 percent per year, and the stock consistently goes ex-dividend 40 days before dividend payment ...
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