Question: After adding a new line of widgets, Worldwide expects all assets and current liabilities to shrink with sales. the company has sales for the year
After adding a new line of widgets, Worldwide expects all assets and current liabilities to shrink with sales. the company has sales for the year just ended of $20 million. The company also has a profit margin of 20 percent, a return ratio of 25 percent, and expected sales of $18 million next year.
Worldwide Widgets Manufacturing, Inc., shows the following on its balance sheet:
| Assets | Liabilities & Equity | ||
| Current Assets | $2,500,000 | Current liabilites | $1,250,000 |
| Fixed Assets | $3,500,000 | Long-term Debt | $1,500,000 |
| Equity | $3,250,000 | ||
| Total Assets | $6,000,000 | Total Liabilities & Equity | $6,000,000 |
What amount of additional funds (AFN) will worldwide need from external sources to fund the expected growth? What does the AFN show?
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