Finance Learning exp.2
Owners of a business are contemplating investing $550,000 in non-current assets in early January 2014. They are explo3ing ways to finance it. In 2012, the company had $250,000 in trade receivables, an amount that it expects will increase to $275,000 in 2013. The inventory level for 2012 was $430,000 and, having introduced a new inventory management system, the owners expect to be more efficient in managing it. They forecast a level of $370,000 in inventories by the end of 2013. They expect a substantial increase in revenue, which will increase their profit from $150,000 in 2012 to $230,000 in 2013.
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1. ; How much cash will be generated from internal operations by the end of 2013? ;
2. ; Will the owners have to borrow money from investors to finance the expansion? ;[yes/no]
3. ; If yes, how much? [amount]