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    Mc Govney Co Financial Statements

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    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 $

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    https://brainmass.com/business/financial-statements/mc-govney-co-financial-statements-548391

    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