The most recent financial statements for Alexander Company are shown here: Income Statement Sales $ 40,000 Current assets $ 62,640 Costs 25,600 Fixed assets 34,560 Taxable income $14,400 Total $ 97,200 Taxes (22%) Net income 3,168 $11,232 Multiple Choice Assets and costs are proportional to sales. The company maintains a constant 32 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? $6,689.64 $3,411.15 Balance Sheet $2,852.25 $6,489.64 Long-term debt $43,200 Equity 54,000 Total $ 97,200 $6,589.64
The most recent financial statements for Alexander Company are shown here: Income Statement Sales $ 40,000 Current assets $ 62,640 Costs 25,600 Fixed assets 34,560 Taxable income $14,400 Total $ 97,200 Taxes (22%) Net income 3,168 $11,232 Multiple Choice Assets and costs are proportional to sales. The company maintains a constant 32 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? $6,689.64 $3,411.15 Balance Sheet $2,852.25 $6,489.64 Long-term debt $43,200 Equity 54,000 Total $ 97,200 $6,589.64
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The most recent financial statements for Alexander Company are shown here:
Income Statement
Sales
$ 40,000 Current assets $62,640
Costs
25,600
Fixed assets
Total
34,560
$ 97,200
Taxable income $14,400
Taxes (22%)
Net income
3,168
$11,232
Multiple Choice
Assets and costs are proportional to sales. The company maintains a constant 32
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?
$6,689.64
$3,411.15
Balance Sheet
$2,852.25
$6,489.64
Long-term debt $43,200
Equity
54,000
Total
$ 97,200
$6,589.64
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