Question

​(Financial forecastinglong dashdiscretionary financing needs​) J. T.​ Jarmon, Inc. has been in business for only 1​ year, and the CFO expects that the relationship between firm sales and its operating​ expenses, current​ assets, net fixed​ assets, and current liabilities will remain at their current proportion of sales. Last​ year, Jarmon had ​$10 million in sales and net income of ​$1.00 million. The firm anticipates that next​ year's sales will reach ​$12.500 ​million, with net income rising to ​$1.10 million. Given its present high rate of​ growth, the firm retains all its earnings to help defray the cost of new investments. The​ firm's balance sheet for 2018 is found in the popup​ window:

BALANCE SHEET      
   12/31/2018   % OF SALES
Current assets   2,000,000   20%
Net fixed assets   5,500,000   55%
Total   7,500,000  
LIABILITIES AND OWNER'S EQUITY      
Accounts payable   2,500,000   25%
Long-term debt   1,300,000  
Total liabilities   3,800,000  
Common stock   1,000,000  
Paid-in capital   1,700,000  
Retained earnings   1,000,000  
Common equity   3,700,000  
Total   7,500,000  

Using the information​ provided, make an estimate of​ Jarmon's financing requirements or total assets for 2019 and its discretionary financing needs ​(DFN​). What are​ Jarmon's financing requirements or total assets for​ 2019? $ (Round to the nearest​ dollar.) What are​ Jarmon's discretionary financing needs ​(DFN​) for​ 2019? ​$ ​(Round to the nearest​ dollar.)

Answer 1