Sales and Growth [LO2] The most recent financial statements for Throwing Copper Co. are shown here:
Income Statement |
| Balance Sheet |
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Sales | $ 42,000 | Current assets | $ 21,000 | Long-term debt | $ 51,000 |
Costs: | 28,500 | Fixed assets | 86,000 | Equity | 56,000 |
Taxable income | $ 13,500 | Total | $ 1,07,000 | Total | $ 1,07,000 |
Taxes (34%) | 4,590 |
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Net Income | $ 8,910 |
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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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