1. Consider the following information for the percentage of sales approach: 
2. 
   
3. Sales = $3M,
4. NI = $0.4M, 
5. Retention ratio = 0.75 
6. Total Asset = $4M
7. Current Liability $0.2M 
8. Long-term debt = $1M 
9. Equity = $2.8M 
10. 
    
11. If sales increase by 40% (and NI, assets, and CL increase at the same rate), calculate the external financing needed.

Answer rating: 100% (QA)

We can use the percentage of sales approach to calculate the external financing n... View the full answer