Suppose That Team Industries, Inc A) $2,140,000
B) $2,320,000
C) $2,500,000
D) $4,500,000

Suppose that Team Industries, Inc. currently has the balance sheet shown as follows, and that sales for the year just ended were $3 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $6 million next year. If all assets and current liabilities are expected to increase with sales, what amount of additional funds will the company need from external sources?
$$\begin{array} { l r l l l } \text { Assets } & & { \text { Liabilities and Equity } } \\\text { Current Assets } & \$ 2,000,000 & \text { Current Liabilities } & \$ 2,000,000 \\\text { Fixed Assets } & 2,500,000 & \text { Long-tern Debt } & 1,500,000 \\& & \text { Equity } & 1,000,000 \\\text { Total Assets } & \$ 4,500,000 & \text { Total Liabilities ard Equity } & \$ 4,500,000\end{array}$$

A) $2,140,000
B) $2,320,000
C) $2,500,000
D) $4,500,000

Correct Answer:

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