SALES INCREASE Pierce Furnishings generated $2 million in sales during 2014, and its year-end total assets were $1 5 million. Also, at year-end 2014, current liabilities were

$500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and

$100,000 of accrued liabilities. Looking ahead to 2015, the company estimates that its assets must increase by $0 75 for every $1 00 increase in sales. Pierce’s profit margin is 5%, and its retention ratio is 40%. How large of a sales increase can the company achieve without having to raise funds externally?

AppendixLO1