The most recent financial statements for Fontenot co. are shown here:

Assets and costs are proportional to sales. The company maintains a constant 3 percent dividend payout ratios 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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Income Statement $54,000 Sales Costs 39,300 Taxable income $14,700 Taxes (34%) 4,998 Net income $ 9,702 Current assets Fixed assets Total Balance Sheet $ 31,000 118,000 $149,000 Long-term debt $ 68,000 81,000 $149,000 Equity Total Income Statement $54,000 Sales Costs 39,300 Taxable income $14,700 Taxes (34%) 4,998 Net income $ 9,702 Current assets Fixed assets Total Balance Sheet $ 31,000 118,000 $149,000 Long-term debt $ 68,000 81,000 $149,000 Equity Total

Answer rating: 100% (QA)

The maximum percentage sales increase without issuing new ... View the full answer