Suppose That Wave Industries Currently Has the Balance Sheet Shown

question 29

Multiple Choice

Suppose that Wave Industries currently has the balance sheet shown as follows, and that sales for the year just ended were $25 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $27 million next year. If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will the company need from external sources to fund the expected growth?
$$\begin{array} { l r r l r } \text { Assets } && { \text { Liabilities ard Equity } } \\\text { Current Assets } & \$ 6,500,000 & \text { Current Liabilities } & \$ 4,000,000 \\\text { Fixed Assets } & 13,000,000 & \text { Long-tem Debt } & { 6,500,000 } \\& & \text { Equity } & 9,000,000 \\\text { Total Assets } & \$ 19,500,000 & \text { Total Liabilities and Equity } & \$ 19,500,000\end{array}$$

Understand the concept and practical implications of stimulus filtering in animals.

Grasp innate behavior patterns and their evolutionary significance.

Interpret data from figures and graphs related to animal behavior research.

Distinguish between hypotheses, predictions, and experimental outcomes in scientific studies.

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Definitions:

Merchandise Inventory

The total of all goods held by a company that are ready for sale, typically used in retail and wholesale operations.

Direct Labour Budget

A direct labour budget estimates the total labor cost and number of labor hours required for production in a given period, based on forecasted sales and production levels.

Materials Purchases

involves the acquisition of raw materials required for the production process, an essential part of managing manufacturing inputs.

Cash Collections

The process of gathering all cash received from sales, services, or other business activities.