In 20X3, the Fillmore Company's Sales Were $12

question 63

Multiple Choice

In 20X3, the Fillmore Company's sales were $12.0 million.Its balance sheet at year end 20X3 is shown below.Fillmore's 20X4 sales are expected to be $15 million and its 20X5 sales are expected to be $18 million.Earnings after tax in both years is expected to be 5.0% of sales, and annual dividends of $250,000 are expected to be paid in both 20X4 and 20X5.The company presently has excess plant and equipment capacity.As a result, assume that the net fixed asset figure on the balance sheet will remain constant for both 20X4 and 20X5.Assuming that the ratios of assets (except fixed assets, net) to sales and accounts payable to sales in 20X3 remain the same in 20X4 and 20X5, calculate the total amount, i.e., one number, of external financing required during the 2 year period from 20X4 through 20X5, using the percentage of sales method.
Fillmore Co.Balance Sheet (December 31, 20X3)
($ millions)

• A)$750,000
• B)$250,000
• C)$1,00,000
• D)Non of the answer is corect.

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