The Hudson River Line Company Has a Balance Sheet as of the End

question 68

Multiple Choice

The Hudson River Line Company has a balance sheet as of the end of the year as follows:
$$\begin{array} { | l | r | l | r | } \hline \text { Cash } & 5,000 & \text { Accaunts Payable } & \text { 15,000 } \\\hline \text { Accaunts Receivable } & 20,000 & \text { Nates Payable } & 10,000 \\\hline \text { Inventaries } & 40,000 & \text { Tatal Curtent Liah. } & 25,000 \\\hline \text { Tatal Current As5ets } & \$ 65,000 & \text { Lang-term Debt } & 30,000 \\\hline \text { Fixed As5ets, net } & 50,000 & \text { Stockholder's Equity } & 60,000 \\\hline \text { Tatal A5sets } & \$ 115,000 & \text { Tatal Liabilities a Equity } & \$ 115,000 \\\hline\end{array}$$
Last year, the firm had sales of $148,750.This year the company expects sales to increase 25%, to generate earnings after tax of $16,000, and to pay a dividend of $5,000.Hudson operated its fixed assets at 85% capacity last year.What additional financing will be needed to support the sales increase?

• A)$2,125
• B)$4,625
• C)$1,500
• D)$375 surplus -- no financing needed.

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Definitions:

Human Resource Department

A department within an organization that is focused on managing employee-related processes like recruitment, training, and payroll.

Reengineering

The process of redesigning business processes and workflows to improve efficiency, productivity, and competitiveness.

Health Care

The maintenance or improvement of health via the prevention, diagnosis, treatment, and recovery of illnesses, injuries, and other physical and mental impairments in people.

Bureaucratic

Pertaining to the administration of organizations with a rigid hierarchy, fixed rules, and a focus on procedure over effectiveness.