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 $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?

A) $6,240,000
B) $6,333,333.33
C) $8,333,333.33
D) $4,833,000

Correct Answer:

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