The Hudson River Line Company Has a Balance Sheet as of the End

Multiple Choice

The Hudson River Line Company has a balance sheet as of the end of the year as follows:
$$\begin{array} { | l | r | l | r | } \hline \text { Cash } & 5,000 & \text { Accaunts Payable } & \text { 15,000 } \\\hline \text { Accaunts Receivable } & 20,000 & \text { Nates Payable } & 10,000 \\\hline \text { Inventaries } & 40,000 & \text { Tatal Curtent Liah. } & 25,000 \\\hline \text { Tatal Current As5ets } & \$ 65,000 & \text { Lang-term Debt } & 30,000 \\\hline \text { Fixed As5ets, net } & 50,000 & \text { Stockholder's Equity } & 60,000 \\\hline \text { Tatal A5sets } & \$ 115,000 & \text { Tatal Liabilities a Equity } & \$ 115,000 \\\hline\end{array}$$
Last year, the firm had sales of $148,750.This year the company expects sales to increase 25%, to generate earnings after tax of $16,000, and to pay a dividend of $5,000.Hudson operated its fixed assets at 85% capacity last year.What additional financing will be needed to support the sales increase?

A) $2,125
B) $4,625
C) $1,500
D) $375 surplus -- no financing needed.