Suppose That Wind Em Corp A) $100,000
B) $250,000
C) $200,000
D) $500,000

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, how much will spontaneous liabilities increase with the increase in sales?
$$\begin{array} { l r l r r } \text { Assets } && { \text { Iiabilities ard Equity } } \\\text { Current Assets } & \$ 500,000 & \text { Current Liabilities } & \$ 200,000 \\\text { Fixed Assets } & 250,000 & \text { Long-tern Debt } &300,000 \\& & \text { Equity } & 250,000 \\\text { Total Assets } & \$ 750,000 & \text { Total Liabilities and Equity } & \$ 750,000\end{array}$$

A) $100,000
B) $250,000
C) $200,000
D) $500,000

Correct Answer:

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