(Financial
forecastinglong dash—percent
of
sales​)
Next​ year's sales for Cumberland Mfg. are expected to be​$22.00 million. Current sales are ​$18
​million, based on current assets of $5.00 million and fixedassets of ​$5.00million. The​ firm's net profit margin is 5 percentafter taxes. Cumberland estimates that its current assets will risein direct proportion to the increase in​ sales, but that its fixedassets will increase by only​ $150,000. Currently, Cumberland has$2.00 million in accounts payable​ (which vary directly with​sales), ​$1 million in​ long-term debt​ (due in 10​ years), andcommon equity​ (including​ $4 million in retained​ earnings)totaling ​$7.00 million. Cumberland plans to pay $0.75 million incommon stock dividends next year.
a. What are​ Cumberland's total financing needs​ (that is,total​ assets) for the coming​ year?
b. Given the​ firm's projections and dividend payment​ plans,what are its discretionary financing​ needs?
c. Based on your​ projections, and assuming that the​ $150,000expansion in fixed assets will​ occur, what is the largest increasein sales the firm can support without having to resort to the useof discretionary sources of​ financing?
a. What are​ Cumberland's total financing needs​ (taht is,total​ assets) for the coming​ year?
​$nothing
million  ​(Round to two decimal​ places.)
b. Given the​ firm's projections and dividend payment​ plans,what are its discretionary financing​ needs?
​$nothing
million  ​(Round to two decimal​ places.)
c. Based on your​ projections, and assuming that the​ $150,000expansion in fixed assets will​ occur, what is the largest increasein sales the firm can support without having to resort to the useof discretionary sources of​ financing?
​$nothing
million  ​(Round to two decimal​ places.)
