Achieve without having to raise funds externally
Financial Management
Pierce Furnishings generated $2 million in sales during 2012, and its year-end
total assets were $1.3 million. Also, at year-end 2012, current liabilities were
$500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable,
and $100,000 of accrued liabilities. Looking ahead to 2013, the company estimates
that its assets must increase by $0.65 for every $1.00 increase in sales. Pierce’s
profit margin is 6%, and its retention ratio is 35%. How large of a sales increase
can the company achieve without having to raise funds externally? Write out your
answer completely. For example, 25 million should be entered as 25,000,000. Round
your answer to the nearest cent.
