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The Company's financial statements for the year 2525 show that year-end Total assets of $2,460 include Plant, property, & equipment (PP&E) of $2,100. The assets are financed by a Debt of $760 and Stockholders' equity of $1,700. The annual Sales equal $11,800, total costs equal $11,400, Net income equals $400, Dividends equal $230, and New retained earnings equal $170. For 2526 the asset turnover (sales/total assets), net profit margin (=net income/sales), payout ratio (=dividends/net income) and price-to-earnings ratio (now 22.9) will be constant. The number of shares outstanding is 90. The firm seeks maximum growth by relying exclusively on retained earnings; external financing will be zero. What is the sales growth rate?

The Company's financial statements for the year 2525 show that year-end Total assets of $2,460 include Plant, property, & equipment (PP&E) of $2,100. The assets are financed by a Debt of $760 and Stockholders' equity of $1,700. The annual Sales equal $11,800, total costs equal $11,400, Net income equals $400, Dividends equal $230, and New retained earnings equal $170. For 2526 the asset turnover (sales/total assets), net profit margin (=net income/sales), payout ratio (=dividends/net income) and price-to-earnings ratio (now 22.9) will be constant. The number of shares outstanding is 90. The firm seeks maximum growth by relying exclusively on retained earnings; external financing will be zero. What is the sales growth rate?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What is the sales growth rate?

The Company's financial statements for the year 2525 show that year-end Total assets of $2,460 include Plant, property, & equipment (PP&E) of $2,100. The assets are financed by a Debt of $760 and Stockholders' equity of $1,700. The annual Sales equal $11,800, total costs equal $11,400, Net income equals $400, Dividends equal $230, and New retained earnings equal $170. For 2526 the asset turnover (sales/total assets), net profit margin (=net income/sales), payout ratio (=dividends/net income) and price-to-earnings ratio (now 22.9) will be constant. The number of shares outstanding is 90. The firm seeks maximum growth by relying exclusively on retained earnings; external financing will be zero. What is the sales growth rate?
Transcribed Image Text:The Company's financial statements for the year 2525 show that year-end Total assets of $2,460 include Plant, property, & equipment (PP&E) of $2,100. The assets are financed by a Debt of $760 and Stockholders' equity of $1,700. The annual Sales equal $11,800, total costs equal $11,400, Net income equals $400, Dividends equal $230, and New retained earnings equal $170. For 2526 the asset turnover (sales/total assets), net profit margin (=net income/sales), payout ratio (=dividends/net income) and price-to-earnings ratio (now 22.9) will be constant. The number of shares outstanding is 90. The firm seeks maximum growth by relying exclusively on retained earnings; external financing will be zero. What is the sales growth rate?
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