Sales are expected to ride by 22 percent in the coming year, and the components of the
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Sales are expected to ride by 22 percent in the coming year, and the components of the income statement and balance sheet that are expected to increase at the same 22 percent rate as sales, assuming a constant dividend payment. Fixed assets were being operated at 40 percent of capacity in 2016, but all other assets were used to full capacity. Under-utilized fixed assets cannot be sold. Assuming that the firm wants to cover external funding with half equity, 25 percent long-term debt and the remainder from notes payable. What is the external funding requirements and ROE using the percentage of sales method?
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