The most recent financial statements for Throwing Copper Co. are shown here: 35,

ID: 2751054 • Letter: T

Question

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

35,200

$133,650

$13,068

Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a constant debtequity ratio.

What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not round your intermediate calculations.)

$7,828.1

$4,041.03

$3,065.88

$7,728.1

$7,628.1

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

Return on equity= net income/total equity= 13068/74250=0.176 or 17.6%

b=1-.30=.70

sustainable growth rate= (ROE*b)/ {1-(ROE*b)}= (0.176*0.70)/{1-(0.176*0.70)}

= 0.140 or 14%

Therefore, maximum increase in sales= 55,000*0.14= $2100

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