Goldilochs Inc

question 61

Multiple Choice

Goldilochs Inc. reported sales of $8 million and net income of $2 million. The firm has a total asset turnover of 3.2. The firm's chief financial officer is projecting a $5 million increase in sales and that spontaneous liabilities will increase by $350,000 automatically. The firm currently pays out 80% of its net income to shareholders. Assuming that all assets and current liabilities are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

• A) $501,900
• B) $562,500
• C) $601,800
• D) $446,600

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Definitions:

Sales Estimates

Forecasts of the quantity of a product or service a business expects to sell in a certain period, which is crucial for financial planning and inventory management.

Production Estimates

Projections or forecasts of the volume or quantity of goods that a company plans to manufacture in a given period.

Units

In the context of business, units refer to the individual items or quantities of a product or service that are produced or sold.

Production Budget

An estimation of the total costs to produce a set amount of goods over a specific period.