Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $12 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets?AssetsLiabilities and EquityCurrent Assets$2,000,000 Current Liabilities$2,500,000 Fixed Assets 8,000,000 Long-term Debt 1,500,000 Equity 6,000,000 Total Assets$10,000,000 Total Liabilities and Equity$10,000,000
A. $8,333,333
B. $6,333,333
C. $6,240,000
D. $4,833,000
Answer: A
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