After adding a new line of widgets, Worldwide expects all assets and current liabilities to shrink...

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After adding a new line of widgets, Worldwide expects all assetsand current liabilities to shrink with sales. the company has salesfor the year just ended of $20 million. The company also has aprofit margin of 20 percent, a return ratio of 25 percent, andexpected sales of $18 million next year.
Worldwide Widgets Manufacturing, Inc., shows the following onits 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 fromexternal sources to fund the expected growth? What does the AFNshow?
Please show all detailed calculations.
Also kindly put the answers not on pen and paper but typedinstead. Thanks

Answer & Explanation Solved by verified expert

4.4 Ratings (785 Votes)

AnswerAdditional funds needed Currentlevel of assets 6 millionPercentage increase in sales ie Change in sales divide by currentsales See Answer

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After adding a new line of widgets, Worldwide expects all assetsand current liabilities to shrink with sales. the company has salesfor the year just ended of $20 million. The company also has aprofit margin of 20 percent, a return ratio of 25 percent, andexpected sales of $18 million next year.Worldwide Widgets Manufacturing, Inc., shows the following onits balance sheet:AssetsLiabilities & EquityCurrent Assets$2,500,000Current liabilites$1,250,000Fixed Assets$3,500,000Long-term Debt$1,500,000Equity$3,250,000Total Assets$6,000,000Total Liabilities & Equity$6,000,000What amount of additional funds (AFN) will worldwide need fromexternal sources to fund the expected growth? What does the AFNshow?Please show all detailed calculations.Also kindly put the answers not on pen and paper but typedinstead. Thanks

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