You Are the Owner of a Small Business Which Has

question 26

Multiple Choice

You are the owner of a small business which has the following balance sheet: Fixed and current assets are fully utilized, and the sales/assets and sales/spontaneous liabilities ratios will remain constant.Next year you expect sales to increase by 50 percent.You also expect to retain $2,000 of next year's earnings within the firm.What is next year's additional external funding requirement, i.e., what is your firm's AFN?

• A) No additional funds are required.
• B) $3,500
• C) $4,500
• D) $5,500
• E) The answer depends on this year's sales level.

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