Suppose That Wind Em Corp

question 8

Multiple Choice

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $15 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current liabilities are expected to grow with sales, how much will spontaneous liabilities increase with the increase in sales?

• A)$1,950,000
• B)$2,240,000
• C)$2,366,000
• D)$1,167,000

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