Paramount Paper Inc.
Prior 3-Year Income Statements
	2013	2014	2015
Sales Revenues	28,255,000	37,340,000	54,670,000
Cash Operating Costs	22,321,450	32,112,400	47,562,900
Depreciation	2,775,000	2,915,000	3,513,000
Total Operating Costs	25,096,450	35,027,400	51,075,900
Operating Income (EBIT)	3,158,550	2,312,600	3,594,100
Interest Expenses	325,000	512,000	623,000
Taxable Income	2,833,550	1,800,600	2,971,100
Taxes	1,133,420	720,240	1,188,440
Net Income	1,700,130	1,080,360	1,782,660
Preferred Dividends	108,500	136,500	171,500
Addition to Retained Earnings	1,591,630	943,860	1,611,160

How much additional sales can the company support without having to add fixed assets?

Will Paramount Paper have to raise external capital over the next 12 months? If so how much? If not, why not?

Answer rating: 100% (QA)

Answer 1 The additional sales that the company can support without having to add fixed assets can be calculated using the following formula Additional ... View the full answer