Antivirus Inc. expects its sales next year to be $2,500,000. Inventory and accounts receivable will increase $480,000 to accommodate this sales level. The company has a steady profit margin of 15 percent with a 35 percent dividend payout. How much external financing will the firm have to seek

$236,250

Explanation:

Next year sales = $2,500,000

Profit margin = 15% = Net profit/$2,500,000

Net profit = 15% × $2,500,000 = $375,000

Dividend = $375,000 × 35% = $131,250

Retained earning = $375,000 - $131,250 = $243,750

Asset increase = $480,000

External finance needed = Asset increase - Retained earning = $480,000 - $243,750 = $236,250

Therefore, the firm will have to seek $236,250 external financing.

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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answer; capital structure decision;