Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The most recent financial statements for Anderson Company are shown here:
Income Statement
Balance Sheet
Sales
Costs
$ 58,800
Current
assets
$ 28,800
24,800
Fixed assets
123,000
Long-term
debt
Equity
$ 62,600
89,200
Taxable income
$ 34,000
Total
$151,800
Total
$151,800
Taxes (21%)
7,140
Net income
$ 26,860
Assets and costs are proportional to sales. Long-term debt and equity are not. 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? (Do not round intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
Maximum increase in sales
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Transcribed Image Text:The most recent financial statements for Anderson Company are shown here: Income Statement Balance Sheet Sales Costs $ 58,800 Current assets $ 28,800 24,800 Fixed assets 123,000 Long-term debt Equity $ 62,600 89,200 Taxable income $ 34,000 Total $151,800 Total $151,800 Taxes (21%) 7,140 Net income $ 26,860 Assets and costs are proportional to sales. Long-term debt and equity are not. 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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Maximum increase in sales
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