Question: Bates Fabricators, Inc., estimates that it invests $0.25 in assets for each $1 of new sales. However, $0.05 in profits is produced by each $1

Bates Fabricators, Inc., estimates that it invests $0.25 in assets for each $1 of new sales. However, $0.05 in profits is produced by each $1 of additional sales, of which $0.01 can be reinvested in the firm. If sales rise by $750,000 next year from their current level of $5 million and the ratio of spontaneous liabilities to sales is .20, what will be the firm's need for discretionary financing?

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