Suppose That Wind Em Corp A) $100,000
B) $250,000
C) $750,000
D) $500,000

question 6

Multiple Choice

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets?
$$\begin{array} { l r l r r } \text { Assets } && { \text { Iiabilities ard Equity } } \\\text { Current Assets } & \$ 500,000 & \text { Current Liabilities } & \$ 200,000 \\\text { Fixed Assets } & 250,000 & \text { Long-tern Debt } &300,000 \\& & \text { Equity } & 250,000 \\\text { Total Assets } & \$ 750,000 & \text { Total Liabilities and Equity } & \$ 750,000\end{array}$$

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Definitions:

Best Tax

Refers to an optimal tax system that maximizes efficiency and fairness, minimizing distortion in resource allocation and economic behaviors.

Tax Rates

The percentages at which income, property, or purchases are taxed by the government.

Tax Revenues

The fiscal resources that are obtained by governments from taxes.

Vertical Equity

A principle in taxation where taxpayers with a greater ability to pay, typically measured by income or wealth, contribute more in taxes.