Question
In: Finance
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?
Solutions
Expert Solution
Thus, Maximum Increase in Sales = 9.09% or $5,454 ($65,454-$60,000)
jeff jeffy answered 2 years agoRelated Solutions
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
$
45,500
Current assets
$
18,940
Long-term debt
$
37,920
Costs
36,400
Fixed assets
69,200
Equity
50,220
Taxable income
$
9,100
Total
$
88,140
Total
$
88,140
Taxes (23%)
2,093
Net income
$
7,007
Assets and costs are proportional to sales. The company
maintains a constant 40 percent dividend payout ratio and a
constant debt-equity ratio.
What is the maximum dollar increase...
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
The most recent
financial statements for Live Co. are shown here:
Income Statement
Balance Sheet
Sales
$3,900
Current assets
$4,145
Debt
$8,288
Costs
2,574
Fixed assets
10,149
Equity
6,006
Taxable income
$1,326
Total
$14,294
Total
$14,294
Taxes (33%)
438
Net income
$888
Assets and costs
are proportional to sales. Debt and equity are not. The company
maintains a constant 18 percent dividend payout ratio. No external
equity financing is possible.
Required:
What is the
internal growth rate? (Do...
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Live Co. are shown
here:
Income Statement
Balance Sheet
Sales
$11,000
Current assets
$23,719
Debt
$23,377
Costs
6,600
Fixed assets
16,598
Equity
16,940
Taxable income
$4,400
Total
$40,317
Total
$40,317
Taxes (34%)
1,496
Net income
$2,904
Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 26 percent dividend payout
ratio. No external equity financing is possible.
Required:
What is the sustainable growth rate? (Do not round...
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Live Co. are shown
here:
Income Statement
Balance Sheet
Sales
$3,900
Current assets
$4,145
Debt
$8,288
Costs
2,574
Fixed assets
10,149
Equity
6,006
Taxable income
$1,326
Total
$14,294
Total
$14,294
Taxes (35%)
464
Net income
$862
Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 26 percent dividend payout
ratio. No external equity financing is possible.
Required:
What is the internal growth rate? (Do...
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Live Co. are shown
here:
Income Statement
Balance Sheet
Sales
$3,900
Current assets
$4,145
Debt
$8,288
Costs
2,574
Fixed assets
10,149
Equity
6,006
Taxable income
$1,326
Total
$14,294
Total
$14,294
Taxes (35%)
464
Net income
$862
Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 26 percent dividend payout
ratio. No external equity financing is possible.
Required:
What is the internal growth rate? (Do...
The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Bello Co. are shown
here: Income Statement Balance Sheet Sales $ 19,600 Current assets
$ 11,840 Debt $ 16,120 Costs 13,400 Fixed assets 29,250 Equity
24,970 Taxable income $ 6,200 Total $ 41,090 Total $ 41,090 Taxes
(24%) 1,488 Net income $ 4,712 Assets and costs are proportional to
sales. Debt and equity are not. The company maintains a constant 35
percent dividend payout ratio. What is the sustainable growth rate?
(Do not round...
The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Bello Co. are shown
here:
Income Statement
Balance Sheet
Sales
$
19,800
Current assets
$
11,880
Debt
$
16,240
Costs
13,500
Fixed assets
30,150
Equity
25,790
Taxable income
$
6,300
Total
$
42,030
Total
$
42,030
Taxes (24%)
1,512
Net
income
$
4,788
Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 35 percent dividend payout
ratio.
What is the internal growth rate?
The most recent financial statements for Beckett Co. are shown here: INCOME STATEMENT BALANCE SHEET Sales...
The most recent financial statements for Beckett Co. are shown
here:
INCOME STATEMENT
BALANCE SHEET
Sales
$
76,700
Current assets
$
22,000
Long-term debt
$
56,000
Costs
61,000
Fixed assets
150,000
Equity
116,000
Taxable income
$
15,700
Total
$
172,000
Total
$
172,000
Taxes (24%)
3,768
Net income
$
11,932
Assets and costs are proportional to sales. The company
maintains a constant 40 percent dividend payout ratio and a
constant debt-equity ratio.
What is the maximum increase in sales that...
The most recent financial statements for Schenkel Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Schenkel Co. are shown
here:
Income Statement
Balance Sheet
Sales
$
17,800
Current assets
$
11,300
Debt
$
15,800
Costs
13,100
Fixed assets
27,250
Equity
22,750
Taxable income
$
4,700
Total
$
38,550
Total
$
38,550
Taxes (40%)
1,880
Net
income
$
2,820
Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 20 percent dividend payout
ratio. No external financing is possible.
What is the internal...
The most recent financial statements for Hailey Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Hailey Co. are shown
here:
Income Statement
Balance Sheet
Sales
$
78,600
Current assets
$
32,100
Long-term debt
$
69,200
Costs
27,000
Fixed assets
128,500
Equity
91,400
Taxable income
$
51,600
Total
$
160,600
Total
$
160,600
Taxes (22%)
11,352
Net income
$
40,248
Assets and costs are proportional to sales. The company
maintains a constant 25 percent dividend payout ratio and a
constant debt-equity ratio.
What is the maximum increase in...
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