Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $6.6 million.
The firm also has a profit margin of 30 percent, a retention ratio of 20 percent, and expects sales of $8.6 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 |
$ |
1,584,000 |
|
Current liabilities |
$ |
2,178,000 |
|
| Fixed assets |
|
4,356,000 |
|
Long-term debt |
|
1,700,000 |
|
|
|
|
|
Equity |
|
2,062,000 |
|
|
|
|
|
|
|
|
|
| Total assets |
$ |
5,940,000 |
|
Total liabilities and equity |
$ |
5,940,000 |
|
|
|
|
|
|
|
|
|
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? (Enter your answer in dollars not in millions.)