What is the maximum possible growth rate for Planners Peanuts

(see problem 9) if the payout ratio remains at 50 percent and

a. no external debt or equity is to be issued

b. the firm maintains a fixed debt ratio but issues no equity

Data from in problem 9

Here are the abbreviated financial statements for Planners Peanuts:

If sales increase by 20 percent in 2001, and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 20 percent), what must be the balancing item? What will be its value?

Data from in problem 9

Here are the abbreviated financial statements for Planners Peanuts:

If sales increase by 20 percent in 2001, and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 20 percent), what must be the balancing item? What will be its value?

Transcribed Image Text:

INCOME STATEMENT, 2000 Sales $2,000 Cost 1,500 Net income $ 500 BALANCE SHEET, YEAR-END 1999 2000 1999 2000 Assets $2,500 $3,000 Debt $ 833 $1,000 Equity 1,667 2,000 Total $2,500 $3,000 Total $2,500 $3,000