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Dexter's has annual sales of $53,800, current assets of $18,900, and net working capital of $2,800. Assume this firm is operating at full capacity and that all costs, net working capital, and fixed assets vary directly with sales. The debt-equity ratio and the dividend payout ratio are constant. What is the pro forma current liabilities value for next year if sales are projected to increase by 7.5 percent

Respuesta :

jepessoa

Answer:

$17,307.50

Explanation:

net working capital = current assets - current liabilities

$2,800 = $18,900 - current liabilities

current liabilities = $18,900 - $2,800 = $16,100

next year sales are projected to increase by 7.5%, and net working capital should increase in the same proportion (including both current assets and current liabilities).

next year's current liabilities = $16,100 x (1 + 7.5%) = $17,307.50

abiolataiwo2015

The pro forma current liabilities value for next year if sales are projected to increase by 7.5 percent is $17,308.

First step is to compute the current liabilities

Current liabilities = $18,900 - $2,800

Current liabilities =$16,100

Second step is to calculate Pro forma current liabilities  

Pro forma current liabilities=$16,100 x (1 +0.075)

Pro forma current liabilities=$16,100 x 1.075

Pro forma current liabilities=$17,307.5

Pro forma current liabilities=$17,308 (Approximately)

Inconclusion the pro forma current liabilities value for next year if sales are projected to increase by 7.5 percent is $17,308.

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