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Self-supporting growth rate

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Maggie's Muffins, Inc., generated $5M in sales in 2013, and its year-end total assets were $2.5M. Also, at year-end 2013, currently liabilities were $1M, consisting of $300K of notes payable, $500K of account payable, and $200K of accruals. Looking ahead to 2014, the company estimates that its asset 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 its 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?

Reference no: EM131044462

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