How large of a sales increase can maggies muffins

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Reference no: EM131025636

Maggie's Muffins, Inc. generated $2 million in sales during 2007, and its year-end total assets were $1.5 million. Also, at year-end 2007, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2008, the company estimates that its assets must increase by $0.75 for every $1.00 increase in sales. Maggie's Muffins, Inc. profit margin is 5%, and its retention ratio is 40%.

How large of a sales increase can Maggie's Muffins, Inc. achieve without having to raise funds externally? (Show work)

Reference no: EM131025636

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