BK Metals Is Currently Operating at Full Capacity

question 82

Multiple Choice

BK Metals is currently operating at full capacity. The profit margin and the dividend payout ratio are held constant. Net working capital and fixed assets vary directly with sales. The company currently has current liabilities of $3,950, long-term debt of $14,700, net working capital of $7,850, net fixed assets of $27,600, owners' equity of $20,750, net income of $2,900, and dividends paid of $870. What is the external financing need if sales increase by 11 percent?

• A) $896
• B) $1,646
• C) $972
• D) −$145
• E) −$768

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Definitions:

Effective

Describes something that produces the intended or desired result.

Immediately

Without any delay; instantly or right away.

Personally

Relates to or concerns the private aspects of someone's life, often implicating a direct and individual involvement.

Reward System

A set of policies, mechanisms, and tools used by organizations to motivate and acknowledge employees' contributions.