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Assets, Accounts Payable and Costs Are Proportional to Sales

Question 253

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Assets, accounts payable and costs are proportional to sales. Debt and equity are not. The sales of Douglass Enterprises are expected to increase by 14% next year. The firm is currently producing at full capacity. Management wants to maintain a constant debt-equity ratio and a constant dividend payout ratio. What is the external financing need? A) -$325 B) -$238 C) $542 D) $562 E) $962 Assets, accounts payable and costs are proportional to sales. Debt and equity are not. The sales of Douglass Enterprises are expected to increase by 14% next year. The firm is currently producing at full capacity. Management wants to maintain a constant debt-equity ratio and a constant dividend payout ratio. What is the external financing need? A) -$325 B) -$238 C) $542 D) $562 E) $962 Assets, accounts payable and costs are proportional to sales. Debt and equity are not.
The sales of Douglass Enterprises are expected to increase by 14% next year. The firm is currently producing at full capacity. Management wants to maintain a constant debt-equity ratio and a constant dividend payout ratio. What is the external financing need?


A) -$325
B) -$238
C) $542
D) $562
E) $962

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