Question: Maggie's Muffins Bakery generated $5,000,000 in sales during 2016, and its year-end total assets were $2,500,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting
Maggie's Muffins Bakery generated $5,000,000 in sales during 2016, and its year-end total assets were $2,500,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2017, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 7%, and its payout ratio will be 80%. How large a sales increase can the company achieve without having to raise funds externally-that is, what is its selfsupporting growth rate?
Step by Step Solution
3.40 Rating (159 Votes )
There are 3 Steps involved in it
S 0 5000000 A 0 2500000 CL 700000NP 300000 AP 500000 Accruals 200000M 7 payout ratio 80 A 0 S ... View full answer
Get step-by-step solutions from verified subject matter experts
Document Format (1 attachment)
1090-B-C-F-S-V(456).docx
120 KBs Word File
