Under each of the following three assumptions: - No expansion in net capital assets is...
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Accounting
Under each of the following three assumptions:
- No expansion in net capital assets is required.
- A 10% increase in net capital assets is required.
- A $15,000 increase in net capital assets is required.
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The Longbranch Western Wear Company has the following financial statements, which are representative of the company's historical average. Longbranch is expecting a 20 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead, it will be done through more efficient asset utilization in the existing stores. Of liabilities, only current liabilities vary directly with sales. (Refer to the example in the chapter and show all calculations). a. Using a percent-of-sales method, determine whether Longbranch Western Wear has external financing needs. b. Prepare a pro forma balance sheet with any financing adjustment made to notes payable. c. Calculate the current ratio and total debt to assets ratio for each year
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