Question
Batik Anyara has sales of $20,700, net income of $3,517, fixed assets of $16,282, current liabilities of $2,940, current assets of $3,018, long-term debt of
Batik Anyara has sales of $20,700, net income of $3,517, fixed assets of $16,282, current liabilities of $2,940, current assets of $3,018, long-term debt of $5,600, and equity of $10,760. Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. Next year's sales are projected to increase by 10.0 percent.
A. What is the maximum rate at which the firm can grow without acquiring any additional external financing?
B. What is the amount of external financing needed if the firm is currently operating at 80 percent capacity?
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