The most recent financial statements for Throwing Copper Co. are shown here: 38,

ID: 2816825 • Letter: T

Question

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

38,400

$145,800

$14,472

Assets and costs are proportional to sales. The company maintains a constant 38 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.)

$3,934.58

$7,374.36

$7,574.36

$7,474.36

$4,370.32

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

Maximum increase in sales:

= Present sales×Sustainable growth rate

= $60,000×(ROE×Retention ratio)÷(1-ROE×Retention ratio)

= $60,000×(($14,472/$81,000)×(1-38%))÷(1-($14,472/$81,000)×(1-38%))

= $7,474.36

Hence, correct option is $7,474.36

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