Company A's Current Sales Are $120 and the Most Current

question 69

Multiple Choice

Company A's current sales are $120 and the most current balance sheet is presented below.Suppose the sales growth rate is 10% and that short-term debt, long-term debt, and equity are not expected to change.What is the external financing needed for next year?

• A)-$13.5
• B)$13.5
• C)$165
• D)$151.5

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Definitions:

Illegal Payments

Transactions made that are prohibited by law, often in the form of bribes or kickbacks.

Divest

The process of selling off subsidiary business interests or investments.

Strategically

Refers to actions taken by a business or individual that are planned to achieve a specific long-term goal or advantage.

Spinoff

A method of divesting a business unit by setting it up as a separate company and giving its shares to stockholders in proportion to their holdings of the original firm. After the spinoff stockholders can trade the two stocks separately.