Fin 101- Sales Increase Pierce Furnishings Generated $2 Million In Sales During 2008

SALES INCREASE Pierce Furnishings generated $2 million in sales during 2008, and its year-end total assets were $1. 5 million. Also, at year-end 2008, 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 2009, the company estimates that its assets must increase by $0. 75 for every $1. 00 increase in sales. Pierce’s profit margin is 5%, and its retention ratio is 40%. How large of a sales increase can the company achieve without having to raise funds externally?

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