(Related to Checkpoint 17.1) (Discretionary financing needs and growt.docx - (Related to Checkpoint 17.1(Discretionary financing needs and growth The

(Related to Checkpoint 17.1) (Discretionary financing needs and growt.docx

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(Related to Checkpoint 17.1) (Discretionary financing needs and growth) The most recent balance sheet for the Armadillo Dog Biscuit Co. is shown in the following table: . The company is about to embark on an advertising campaign which is expected to raise sales from the current level of $4.64 million to $7.36 million by the end of next year. The firm is currently operating at full capacity and will have to increase its investment in both current and fixed assets to support the projected level of new sales. In fact, the firm estimates that both categories of assets will rise in direct proportion to the projected increase in sales. The firm's net profits were 5.8 percent of current year's sales but are expected to rise to 6.8 percent of next year's sales. To help support its anticipated growth in asset needs next year, the firm has suspended plans to pay cash dividends to its stockholders. In past years, a $1.53 per share dividend was paid annually. Armadillo's payables and accrued expenses are expected to vary directly with sales. In addition, notes
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  • Fall '19
  • Balance Sheet, Generally Accepted Accounting Principles, Armadillo

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