Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for...
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| Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $8.0 million. The firm also has a profit margin of 20 percent, a retention ratio of 25 percent, and expects sales of $10.0 million next year. Fixed assets are currently fully utilized, and the nature of Wall-Es fixed assets is such that they must be added in $1 million increments. |
| Assets | Liabilities and Equity | ||||||
| Current assets | $ | 1,600,000 | Current liabilities | $ | 2,080,000 | ||
| Fixed assets | 5,360,000 | Long-term debt | 2,000,000 | ||||
| Equity | 2,880,000 | ||||||
| Total assets | $ | 6,960,000 | Total liabilities and equity | $ | 6,960,000 | ||
| If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.) |
| Additional funds needed | $ |
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