The XYZ company revenue is increased by 15% every year; this is because of increasing
demand of the product in the market and the increasing needs of the customers. As it has been
evident from the balance sheet of the company that the company is able to meet the increasing
demand from its existing resources and production capacity, and no further investment in fixed
assets is required. Resultant the company does not need any further financing for the fixed
assets. The increase in revenue has resultantly increased the account receivable of the company.
The liability side of the company has also increased simultaneously.
The company working capital need for the year 2015 is around $5400, which is result of increase
in account receivables, prepaid, inventories and accounts payable. The company has the long
term debt. The current portion of long term debt has t paid every year; the same will be paid till
year 3, in year 4 the balancing $500 has to be paid. The company’s revolving credit is also
increasing by 15%, which is the source of financing for the company. The increase sales
resulting in increased expenses has to meet by the company through its revolving credit. As it is
expected that long term loan to stockholders which is a source of long term financing will
remain as it is for the next 5 years, therefore nothing to be paid or borrowed from this long term
source of financing. The profits of the company are a major source of financing which is also
showing an increasing trend during five years. The funds raised from the above sources are
enough to meet the current working capital requirement of the company, and company does not
need to take any further loan or outside financing.
