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 find the percent of sales growth needed to equal a Discretionary Financing Needs (DFN) of zero, we need to determine the additional sales required to cover the DFN.
First, let's calculate the additional sales needed to cover the DFN:
Additional sales = DFN = $500,000
Next, we need to calculate the initial sales before the growth:
Initial sales = $10,000,000
Now, let's calculate the target sales (initial sales plus additional sales) needed to reach a DFN of zero:
Target sales = Initial sales + Additional sales = $10,000,000 + $500,000 = $10,500,000
To find the percent of sales growth needed, we can use the following formula:
Percent of sales growth = [(Target sales - Initial sales) / Initial sales] * 100
Substituting the values into the formula:
Percent of sales growth = [(10,500,000 - 10,000,000) / 10,000,000] * 100
Percent of sales growth = (500,000 / 10,000,000) * 100
Percent of sales growth = 0.05 * 100
Percent of sales growth = 5%
Therefore, a sales growth of 5% would be needed to equal a DFN of zero.