Problem:
The most recent financial statements for Mc Govney Co. are shown here:
Income Statement Balance Sheet
Sales $ 52,400 Current assets $ 22,600 Long-term debt $ 52,000
Costs 42,200 Fixed assets 92,000 Equity 62,600
Taxable income $ 10,200 Total $ 114,600 Total $ 114,600
Taxes (34%) 3,468
Net income $ 6,732
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 is issued? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Maximum increase in sales