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Problem:

The most recent financial statements for Throwing Copper Co. are shown here: Income Statement Balance Sheet Sales $50,000 Current assets $78,300 Long-term debt $54,000 Costs 32,000 Fixed assets 43,200 Equity 67,500 Taxable income $18,000 Total $121,500 Total $121,500 Taxes (35%) 6,300 Net income $11,700 Assets and costs are proportional to sales. The company maintains a constant 16 percent dividend payout ratio and a constant debt?equity ratio.

Required:

Question: What is the maximum increase in sales that can be sustained assuming no new equity is issued?

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168201

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