capital budgeting

| December 10, 2015

Sales Increase: Maggie%u2019s Muffins, Inc., generated $5,000,000 in sales during 2012, and its year-end total assets were $2,500,000. Also, at year-end 2012, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $300,000 of accruals. Looking ahead to 2013, the company estimates that is assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 7%, and it payout ratio will be 80%. How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate?

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Cost of capital
cost of capital

Category: Finance

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