Galehouse Gas Stations, Inc., expects sales to increase from $1,500,000 to $1,700,000 next year. Mr. Galehouse believes that net assets (Assets - Liabilities) will represent 70 percent of sales. His firm has a 10 percent return on sales and pays 40 percent of profits out as dividends.
(a) What effect will this growth have on funds?
The cash balance is $ .______________
(b) If the dividend payout is only 15 percent, what effect will this growth have on funds?