Tinbergen Cans Expects Sales Next Year to Be $50,000,000

question 114

Multiple Choice

Tinbergen Cans expects sales next year to be $50,000,000. Inventory and accounts receivable (combined) will increase $8,000,000 to accommodate this sales level. The company has a profit margin of 6 percent and a 30 percent dividend payout. How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.

• A)No external financing will be needed.
• B)Less than $1,000,000 of external financing is needed.
• C)Between $1,000,000 and $5,000,000 of external financing is needed.
• D)More than $5,000,000 of external financing is needed.

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