XYZ Company Has Assets That Are Traditionally 85% of Sales

question 51

Multiple Choice

XYZ Company has assets that are traditionally 85% of sales, and its liabilities traditionally are 50% of sales. Sales for this year are $50,000 and sales for next year are projected to be $150,000 with a profit margin of 10%. No owner payout will be taken. Using the percentage of sales method, XYZ will need

• A) $15,000
• B) $70,000
• C) $52,500
• D) $20,000 of additional financing.
• E) No financing is required.

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