Pierce Furnishings generated $2.0 million in sales during 2002,and its year-end total assets were…


Question Description:

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Pierce Furnishings generated $2.0 million in sales during 2002,and its year-end total assets were $1.5 million. Also ,at year- end 2002,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 2003,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?

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