Math Homework Help

Philips Morris expects the sales for his clothing company to be £ 560,000 next year. Philip notes that net assets (Assets- Liabilities) will remain at 40% of sales. His clothing firm will enjoy a 8% return on total sales. He will start with £ 160,000 in the bank. What would Philips’s ending balance be?

 

Solution

Net assets     = 40% * 560,000

=224,000

Return on total Sales                     =          Net Profit

Total Sales

0.08    =          Net Profit

560,000

Net Profit                               =  560,000 * 0.08

=  44,800.

Since net assets ratio remains the same, the closing balance will be;

=160,000 + 44,800

= 204,800

for more math homework help, check out AceMyHW.com