Maggies Muffins Bakery generated $5 million in sales during 2021, and its year-end operating assets were $2.5

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Maggie’s Muffins Bakery generated $5 million in sales during 2021, and its year-end operating assets were $2.5 million. Also, at year-end 2021, current liabilities were $1 million, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2022, the company estimates that its operating 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 self-supporting growth rate?

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Intermediate Financial Management

ISBN: 9780357516669

14th Edition

Authors: Eugene F Brigham, Phillip R Daves

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