Goldilochs Inc

question 46

Multiple Choice

Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $10.5 million in total assets. The firm's chief financial officer is projecting a 25 percent increase in sales. The firm has $1.25 million in accounts payable and $1,500,000 in long-term debt (bonds) . The firm currently pays out 20 percent of its net income to shareholders. Assuming that all assets and spontaneous liabilities are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

• A) $902,700
• B) $812,500
• C) $821,000
• D) $746,600

---

Definitions:

Multi-Step Income

Multi-step income statements provide a detailed breakdown of revenues, expenses, and profit, distinguishing between operating and non-operating activities.

Cash Flow Statement

A document highlighting the impact of adjustments in balance sheet items and earnings on cash and cash equivalents, divided into operating, investing, and financing sections.

Abnormal Earnings

The profits that exceed or fall short of the expected normal rate of return for a business.

Actual Earnings

The real profits generated by a company over a specific period, after accounting for all expenses.