Lombardi has the following balance sheet: Current assets $7,000 A/P & Accruals $1,500 Net...
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Finance
- Lombardi has the following balance sheet:
Current assets $7,000 A/P & Accruals $1,500
Net property & plant 3,000 Notes Payables 2,500
Common Stock 1,000
Ret. Earnings 5,000
Total assets $10,000 Total liab. + Equity $10,000
Lombardi's net profit margin is 6 percent, and the company pays out 50 percent of its earnings as cash dividends. Its sales this year were $10,000; its assets were used to full capacity and the net profit margin and dividend payout ratio are expected to remain constant. The company plans to raise capital using short-term (3-months) loans (Notes Payables) for its additional fund needed next year. If sales is expected to grow by 45 percent, what will Lombardi's current ratio be after it has raised the necessary capital from issuing Notes Payables? (4 points)
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