The Retail Company Currently Has Assets of $3,000,000 and Accounts

question 15

Multiple Choice

The Retail Company currently has assets of $3,000,000 and accounts payable of $200,000.The firm's sales last year were $10,000,000 with a net profit margin of 1%.If the firm anticipates next year's sales to grow by 8% over that of last year and the firm pays out 25% of its net income in dividends,then what is the estimated external funds requirement for Retail?

• A) $16,000
• B) $81,000
• C) $143,000
• D) $240,000

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Definitions:

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership such as options or warrants.

Liquidation Market

A marketplace where assets are sold quickly, often at a discount, typically due to a company's insolvency or urgent liquidation needs.

Secondary Market

This is a market where investors purchase securities or assets from other investors, rather than from issuing companies directly.

Dealer Market

A financial market mechanism in which transactions are made through dealers who buy and sell securities for their own accounts.