In 2018, Mango Corporation Had Net Income of $5 Million

question 6

Multiple Choice

In 2018, Mango Corporation had net income of $5 million on sales of $50 million.The 2018 balance sheet showed current liabilities of $12 million, long-term debt of $18 million and equity of $45 million.The sales forecast for 2017 is $54 million.If Mango pays no dividends, what is the forecasted increase or decrease in equity at the end of 2019?

• A)$49.5 million
• B)$ 4.5 million
• C)$5.4 million
• D)$(5.4)million

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Definitions:

Production Process

The sequence of operations or activities involved in producing goods or services, from raw materials to finished products.

Machinery

Mechanical devices or equipment required in the manufacturing process or any industry-specific operations.

Operating Leverage

A measure of how revenue growth translates into growth in operating income due to fixed versus variable costs in business operations.