Question: The most recent financial statements for McGovney Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 30 percent

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

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 isissued?

Income Statement Balance Sheet Sales Costs Taxable income Taxes (34%) $49,000 Current assets 21,000 Long-term debt 51,000 56,000 $107,000 86,000 Equity $107,000 Total 37,500 Fixed assets $11,500 Total 3.910 7,590 Net income

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