If sales grew 20% from 10,000,000 to 12,000,000 and the discresinary financing needs is 500,000. What percent of sales grown would be needed to equal a DFN of zero.

To determine the percentage of sales growth needed to equal a DFN (Discretionary Financing Needs) of zero, we first need to understand the concept of DFN.

DFN represents the additional funding a company requires to support its growth in sales. It is calculated by subtracting the increase in spontaneous liabilities (liabilities that automatically increase with sales, such as accounts payable) from the increase in current assets (assets that increase due to sales growth, such as accounts receivable and inventory). A DFN of zero means that the increase in current assets is equal to the increase in spontaneous liabilities, indicating that the company's growth can be supported internally without the need for additional financing.

In this case, the starting sales amount is $10,000,000, and it grows by 20% to $12,000,000. The increase in sales is $12,000,000 - $10,000,000 = $2,000,000.

The discretionary financing needs (DFN) is given as $500,000. This means that the company needs an additional $500,000 in funding to support its growth beyond what can be covered by spontaneous liabilities.

To determine the percentage of sales growth needed to equal a DFN of zero, we can use the following formula:

Percentage Growth Required = (DFN / Starting Sales) × 100%

In this case, DFN is $500,000 and the starting sales are $10,000,000. Plugging in these values into the formula:

Percentage Growth Required = ($500,000 / $10,000,000) × 100%
Percentage Growth Required = 0.05 × 100%
Percentage Growth Required = 5%

Therefore, to achieve a DFN of zero, a sales growth of 5% would be needed.