Steve's Hobbies Inc. had the following balance sheet last ye Cash 800 Accounts payable Accounts receivable 450 Accrued wages Inventories 950 Notes payable 2000 Net fixed assets 34,000 Mortgage 26.500 Common stock 3.200 Retained earnings 4.000 Total liabilities Total assets $36,200 and equity 236.200 Steve has just invented a new product that he expects will cause sales to double from $10,000 to $20,000, increasing net income to $1,000. He feels that he can handle the increase without adding any fixed assets. 

(1) Will Steve need any outside capital if he pays no dividends? 

(2) If so, how much?

Answer rating: 100% (QA)

In order to determine whether Steve will need outside capital we firs... View the full answer