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 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, how much will spontaneous liabilities increase with the increase in sales?

A) $1,950,000
B) $2,240,000
C) $2,366,000
D) $1,167,000

Correct Answer:

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