Question
The most recent financial statements for Widgit Co. are shown here: INCOME STATEMENT BALANCE SHEET Sales $ 77,900 Current assets $ 23,000 Long-term debt $
The most recent financial statements for Widgit Co. are shown here:
| INCOME STATEMENT | BALANCE SHEET | ||||||||||
| Sales | $ | 77,900 | Current assets | $ | 23,000 | Long-term debt | $ | 58,000 | |||
| Costs | 62,600 | Fixed assets | 152,000 | Equity | 117,000 | ||||||
| Taxable income | $ | 15,300 | Total | $ | 175,000 | Total | $ | 175,000 | |||
| Taxes (21%) | 3,213 | ||||||||||
| Net income | $ | 12,087 | |||||||||
Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a constant debt-equity ratio.
What is the maximum increase in sales that can be sustained assuming no new equity is issued?
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Corporate Finance Leasing
Authors: Brian Coyle
1st Edition
0852974620, 9780852974629
