Suppose That Wind Em Corp

Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year just ended were $15 million. The firm also has a profit margin of 23 percent, a retention ratio of 40 percent, and expects sales of $20 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets?

A) $240,000
B) $3,333,333.33
C) $1,366,957.14
D) $1,840,000

Correct Answer:

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