Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $15 million. The firm also has a profit margin of 23 percent, a retention ratio of 40 percent, and expects sales of $20 million next year. If all assets and current liabilities are expected to grow with sales, how much will spontaneous liabilities increase with the increase in sales?
|Assets||Liabilities and Equity|
|Current Assets||$||2,000,000||Current Liabilities||$||2,500,000|
|Fixed Assets||8,000,000||Long-term Debt||1,500,000|
|Total Assets||$||10,000,000||Total Liabilities and Equity||$||10,000,000|