Suppose That Wind Em Corp A) $6,240,000
B) $6,333,333
C) $8,333,333
D) $4,833,000

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $12 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets?
$$\begin{array} { l r l r r } \text { Assets } && { \text { Iiabilities ard Equity } } \\\text { Current Assets } & \$ 2,000,000 & \text { Current Liabilities } & \$ 2,500,000 \\\text { Fixed Assets } & 8,000,000 & \text { Long-tern Debt } &1,500,000 \\& & \text { Equity } & 6,000,000 \\\text { Total Assets } & \$ 10,000,000 & \text { Total Liabilities and Equity } & \$ 10,000,000\end{array}$$

A) $6,240,000
B) $6,333,333
C) $8,333,333
D) $4,833,000

Correct Answer:

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