Given the following information: 

current assets = $400; 

fixed assets = $500; 

accounts payable = $100; 

notes payable = $45; 

long-term debt = $455; 

equity = $300; 

sales = $450; 

costs = $400; 

tax rate = 34%. 

Suppose that current assets, costs, and accounts payable maintain a constant ratio to sales. If the firm is producing at 80% capacity, what is the total external financing needed if sales increase 25%? Assume the firm pays no dividends.

Answer rating: 100% (QA)

Current assets and accounts payable maintain a constant ratio to sales Current assets Sales 400 450 ... View the full answer