Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bannister Legal Services generated $2,000,000 in sales during 2010, and its year-end total assets were $1, 5000,000. Also, at year-end 2010, current liabilities were $5,000,000

Bannister Legal Services generated $2,000,000 in sales during 2010, and its year-end total assets were $1, 5000,000. Also, at year-end 2010, current liabilities were $5,000,000 consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accruals. Looking ahead to 2011, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sale, its profit margin will be 5%, and its payout ratio will be 60%. Question: How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Short Term Financial Management

Authors: Ned C Hill

1st Edition

0023548207, 978-0023548208

More Books

Students also viewed these Finance questions

Question

1. What are the pros and cons of diversity for an organisation?

Answered: 1 week ago

Question

1. Explain the concept of diversity and equality in the workplace.

Answered: 1 week ago