Question

In your business, assets, and liabilities have historically varied with sales. Assets are usually 81 percent of sales, and liabilities are usually 47 percent of sales. Your sales next year will be $209,000 which represents an increase of $47,000. Your profit margin is 9.25 percent. You anticipate that you will have an 30 owner payout of net profit. Using the percentage of sales method, determine the amount of additional financing or surplus for your business next year.

Answer 1

		Current year	Next year
Sales	(i)	$162,000	$209,000
Cost	(ii)	$147,015	$189,667.5
Net Profit @9.25%	(iii) = (i) - (ii)	$14,985	$19,332.5
Owner's payout @30%	(iv)	$4,495.5	$5,799.75
Retained Surplus	(v) = (iii) - (iv)	$10,489.5	$13,532.75
Assets @81% of sales	(vi)	$131,220	$169,290
Liab @47% of sales	(vii)	$76,140	$98,230
Additional Funding	(vi) - (vii) -(v)	$44,590.5	$57,527.25