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The most recent financial statements for Alexander Co. are shown here: Income Statement   Balance Sheet Sales  ...

The most recent financial statements for Alexander Co. are shown here: Income Statement   Balance Sheet Sales   $60,000     Current assets   $93,960     Long-term debt   $64,800 Costs   38,400 Fixed assets   51,840     Equity   81,000 Taxable income   $21,600     Total   $145,800 Total   $145,800 Taxes (24%)   5,184              Net income   $16,416          Assets and costs are proportional to sales. The company maintains a constant 26 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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Expert Solution

Thus, Maximum Increase in Sales = 9.09% or $5,454 ($65,454-$60,000)

jeff jeffy answered 2 years ago
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