Charles Morris Builders Corporation (CMBC) generated $2 million in sales during 2015, and its year-end total assets were $1.5 million. Also, at year-end 2015, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2016, the company estimates that its assets must increase by $0.75 for every $1.00 increase in sales. CMBC’s profit margin is 5%, and its retention ratio is 40%.
Question: Please show all calculations.
1. How large of a sales increase can the company achieve without having to raise funds externally?