Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets?
|Assets||Liabilities and Equity|
|Current Assets||$||500,000||Current Liabilities||$||200,000|
|Fixed Assets||250,000||Long-term Debt||300,000|
|Total Assets||$||750,000||Total Liabilities and Equity||$||750,000|
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(750,000/1m) x 1m = 750,000.