Forecasted liabilities and equity

- If we need $792 in assets, … then our total liabilities and equities … have to add up to $792. … Where is that $792 going to come from? … If sales go up by 20%, … our purchases should also go up by about 20%. … And so our accounts payable balance … should also naturally increase by 20% … from $100 to $120. … And we already computed that our retained earnings … will be $98 at the end of next year. … We already assumed that our loans payable … are going to be $300. … So the only thing left is … how much is paid-in capital going to be? … $120 plus $300 plus something plus $98 … is going to be $792. … That something, the plug number here is $274. … That's what my forecasted paid-in capital is for next year. … Now we can stop and say, "Wait a second. … "I made some simple assumptions. … "I assumed that my sales are going to go up by 20%. … "I assumed that I could do that with no new increase … "in property, plant and equipment. … "I assumed that I could do that with no new loans. … "And I assumed that I'm going to keep …