Question

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

INCOME STATEMENT				BALANCE SHEET
Sales	$	52,200		Current assets	$	22,000		Long-term debt	$	45,500
Costs		42,100		Fixed assets		91,000		Equity		67,500
Taxable income	$	10,100		Total	$	113,000		Total	$	113,000
Taxes (34%)		3,434
Net income	$	6,666

Assets and costs are proportional to sales. The company maintains a constant 20 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 answer to 2 decimal places, e.g., 32.16.)
  
Maximum increase in sales           $

Answer 1

Calculate the maximum increase in sales as follows:

Therefore, the maximum increase in sales is $4,477.80.

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Formulas: