Question: Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.6 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent, and expects sales of $9.6 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments.
| Assets |
Liabilities and Equity |
| Current assets |
$ |
2,508,000 |
|
Current liabilities |
$ |
2,280,000 |
| Fixed assets |
|
5,700,000 |
|
Long-term debt |
|
1,800,000 |
|
|
|
|
Equity |
|
4,128,000 |
| Total assets |
$
|
8,208,000 |
|
Total liabilities and equity |
$
|
8,208,000 |
If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth?