A Firm Has Current Sales of $56,000 A)$64
B)$480
C)$987
D)$1,480
E)$39,321

question 2

Multiple Choice

A firm has current sales of $56,000. Projected sales for next year are $60,000. 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 expected increase in retained earnings is $3,100. What is the projected external financing need given the following current account values?
$\begin{array}{lrr}\text { Current assets } & \$ & 10,700 \\\text { Net fixed assets } & \$ & 26,000 \\\text { Current liabilities } & \$ & 7,800 \\\text { Long-term debt } & \$ & 10,400 \\\text { Common stock } & \$ & 5,000 \\\text { Retained earnings } & \$ & 12,400\end{array}$

• A)$64
• B)$480
• C)$987
• D)$1,480
• E)$39,321

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Definitions:

Growth And Decline

Refers to the phases in the business cycle or individual investments where they experience an increase in value (growth) or a decrease in value (decline).

Return On Assets

Return on Assets (ROA) is a profitability ratio that measures how efficiently a company can manage its assets to produce profit during a period.

Cost Effectiveness

An evaluation criterion that compares the relative costs and outcomes (effects) of two or more courses of action.

Common Size Income Statement

A financial statement in which all items are expressed as a percentage of total sales, facilitating ratio analysis and comparison.