Brigman Industries is evaluating its financing requirements for the coming year. The firm 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 Brigman had $12 million in sales and net income of $1.2 million. The firm anticipates that next year's sales will reach $18 million, with net income rising to $2 million. 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 2015 is shown in the following table:

Estimate Brigman's financing requirements (that is, total assets) for 2016 and its discretionary financing needs (DFN).

Transcribed Image Text:

Brigman Industries Inc. BALANCE SHEET 12/31/2015 2,000,000 8,000,000 %0F SALES 17% 67% Current assets Net fixed assets Total LIABILITIESAND OWNERS EQUITY Accounts payable Long-term detbt Total liabilities Common stock Paid-in capital Retained earnings Common equity 3,000,000 25% NA 1,000,000 1,800,000 1,200,000 ,000,000 NA NA Total