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

Assets and costs are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio and a constant debtequity ratio. What is the maximum increase in sales that can be sustained assuming no new equity is issued?

Transcribed Image Text:

Income Statement Sales Costs Taxable income Taxes (25%) Net income $8,700 5,600 $ 3,100 775 $2,325 Current assets Fixed assets Total Balance Sheet $ 4,200 10,400 $14,600 Long-term debt Equity Total $ 4,300 10,300 $14,600