Suppose That Team Industries, Inc

Suppose that Team Industries, Inc. currently has the balance sheet shown below, 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?

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

Correct Answer:

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