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Mc Govney Co Financial Statements

The most recent financial statements for Mc Govney Co. are shown here:

Income Statement Balance Sheet
Sales $ 52,400 Current assets $ 22,600 Long-term debt $ 52,000
Costs 42,200 Fixed assets 92,000 Equity 62,600

Taxable income $ 10,200 Total $ 114,600 Total $ 114,600

Taxes (34%) 3,468

Net income $ 6,732

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? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Maximum increase in sales $

Solution Preview

Suppose the increase rate is r. (unit: %)
Now, projected net income=6732(1+r) and projected asset=114600(1+r).

So projected ...

Solution Summary

The soluton gives detailed steps on finding the maximum increase in sales that can be sustained assuming no new equity is issued。All formula and calculations are shown and explained.

$2.19