Zurich Insurance Co

Essay

Zurich Insurance Co.has current sales of $10 million and predicts next year's sales will grow to $14 million.Current assets are $3 million and fixed assets are $4 million.The firm's net profit margin is 7% after taxes.Presently,Zurich has $900,000 in accounts payable,$1.1 million in long-term debt,and $5 million (including $2.5 million in retained earnings)in ordinary equity.Next year,Zurich projects that current assets will rise in direct proportion to the forecasted sales,and that fixed assets will rise by $500,000.Zurich also plans to pay dividends of $400,000 to ordinary shareholders.
a.What are Zurich's total financing needs for the upcoming year?
b.Given the above information,what are Zurich's discretionary financing needs?