In 2019, Dabizas Corporation had sales of $200 and ended the year with the

balance sheet given in Table below. For 2020, management forecasts sales of

$240, net income of $12, and dividends of $6. Short-term borrowing, long-term

debt, and common are discretionary; the remaining accounts are spontaneous.

1. Forecast Dabizas’s external financing needed (EFN) in 2020 using the percentage-of-sales method. (10 points)

2. Calculate Current Ratio assuming EFN is financed with Current Liabilities (5 points)

3. Calculate the Debt to Equity ratio assuming EFN is financed with common stock (5 points)

Table: Dabizas Corporation Balance Sheet
Cash Accounts receivable Inventory Fixed assets Total assets	$ 20 50 60 120 $ 250	Short-term borrowing Accounts payable Long-term debt Common stock Retained earnings Total Liab.+Equity	$ 0 30 100 60 60 $ 250

Answer rating: 100% (QA)

1 EFN Short term borrowings 14 as computed below Forecasted Balance Sheet 2020 Assets Liabilities Ca... View the full answer