A Firm Has the Following Account Balances for This Year

question 83

Multiple Choice

A firm has the following account balances for this year. Sales for the year are $420,000. Projected sales for next year are $441,000. The percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except long-term debt and common stock, change according to that approach. The firm plans to decrease the long-term debt balance by $23,500 next year. Retained earnings is expected to increase by $5,400 next year. What is the projected external financing need?
$\begin{array}{lrr} \text {Current assets } &\$48,000\\ \text {Net fixed assets } &\$270,000\\ \text {Current liabilities } \$56,000&\\ \text {Long-term debt } &\$154,000\\ \text { Common stock } &\$50,000\\ \text { Retained earnings } &\$91,000\\\end{array}$

• A)$14,150
• B)$26,850
• C)$32,850
• D)$36,000
• E)$56,350

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Definitions:

Tuckman's Model

A theory describing four stages of group development: forming, storming, norming, and performing, which teams typically follow to become effective.

Group Development

The stages or phases that a group goes through as it matures, usually involving forming, storming, norming, performing, and adjourning.

Stages

Refers to the distinct phases or steps within a process or development cycle.

Cohesive Groups

Groups characterized by strong mutual attachment among members, leading to a unified and solid group structure.