BJ Company's Net Working Capital and All of Its Expenses

Multiple Choice

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 ending value.
B) The maximum rate of sales increase is four percent.
C) The firm cannot exceed its internal rate of growth.
D) Accounts payable will increase at the same rate as fixed assets.
E) Inventory will remain constant at the current level.