Question

(Financial

forecasting—discretionary

financing

needs)

J. T. Jarmon, Inc. has been in business for only 1 year, and the CFO expects that the relationship between firm sales and its operating expenses, current assets, net fixed assets, and current liabilities will remain at their current proportion of sales.

Last year, Jarmon had

$11

million in sales and net income of

$1.10

million. The firm anticipates that next year's sales will reach

$13.750

million, with net income rising to

$1.21

million. Given its present high rate of growth, the firm retains all its earnings to help defray the cost of new investments.

The firm's balance sheet for 2018 is found in the popup window:

J. T. Jarmon, Inc.
BALANCE SHEET
		12/31/2018		% OF SALES
Current assets		$2,750,000		25%
Net fixed assets		6,050,000		55%
Total		$8,800,000
LIABILITIES AND OWNER'S EQUITY
Accounts payable		$2,750,000		25%
Long-term debt		1,400,000		NAa
Total liabilities		$4,150,000
Common stock		1,000,000		NA
Paid-in capital		2,550,000		NA
Retained earnings		1,100,000
Common equity		4,650,000
Total		$8,800,000

.

Using the information provided, make an estimate of Jarmon's financing requirements or total assets for 2019 and its discretionary financing needs

(DFN).

What are Jarmon's financing requirements or total assets for 2019?