Income Statement Sales Costs Taxable income Taxes (24%) Net Income $44,150 35,950 $ 8,200 1,968 $ 6,232 Current assets Fixed assets Total Balance Sheet $18,220 Long-term debt 68,750 Equity $ 86,970 Total $ 37,470 49,500 $ 86,970 Assets and costs are proportional to sales. The company maintains a constant 35 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum dollar Increase in sales that can be sustained assuming no new equity is issued? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Income Statement Sales Costs Taxable income Taxes (24%) Net Income $44,150 35,950 $ 8,200 1,968 $ 6,232 Current assets Fixed assets Total Balance Sheet $18,220 Long-term debt 68,750 Equity $ 86,970 Total $ 37,470 49,500 $ 86,970 Assets and costs are proportional to sales. The company maintains a constant 35 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum dollar Increase in sales that can be sustained assuming no new equity is issued? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 4PB
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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