How large a sales increase can the company achieve

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Pierce Furnishings generated $2.0 million in sales during 2006, and its yearend total assets were $1.5 million. Also, at year-end 2006, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accruals. Looking ahead to 2007, the company estimates that its assets must increase by 75 cents for every $1 increase in sales.

Pierce's profit margin is 5 percent, and its payout ratio is 60 percent. How large a sales increase can the company achieve without having to raise funds externally?

Reference no: EM131376043

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