Question

BJ Company's net working capital and all of its expenses vary directly with sales. The firm is currently operating at 86 percent of capacity. The firm wants no additional external financing of any kind. The tax rate is 21 percent and the dividend payout ratio is fixed at 25 percent. Which statement related to next year's pro forma statements must be correct?
(A) Total equity will remain constant at this year's endng value
(B) The maximum rate of sales increase is four percent
(C) The fem cannot exceed its internal rate of growth
(D) Accounts payable will increase at the same rate as fixed assets.

Answer 1

Answer:

C)The fem cannot exceed its internal rate of growth

Explanation: