CU Tech Expects Sales Next Year Will Be $4

Multiple Choice

CU Tech expects sales next year will be $4.8 million, a 25% increase over current sales. CU has total assets of $2.24 million, and all assets will increase proportionately with sales. CU has $1.49 million in current liabilities and a current ratio of 1.60 to 1. What total financing will CU need to support the expected sales increase?

A) No financing needed, surplus of $139,700
B) $187,500
C) $48,800
D) $234,400