Beason Manufacturing forecasts its sales next year to be $6 million and expects to earn 5 percent of that amount after taxes. The firm is currently in the process of projecting its financing needs and has made the following assumptions (projections):

• Current assets are equal to 20 percent of sales, and fixed assets remain at their current level of $1 million.

• Common equity is currently $0.8 million, and the firm pays out half of its after-tax earnings in dividends.

• The firm has short-term payables and trade credit that normally equal 12 percent of sales, and it has no long-term debt outstanding.

What are Beason’s financing needs for the coming year?

Beason Manufacturing forecasts its sales next year to be 6

 

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