ABC service generated $2 million in sales during 2009, and its year-end total assets were $1.5 million. Also, at year-end 2009, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accruals. Looking ahead to 2010, the company estimates that its assets must increase by 7 cents for every $1 increase in sales. ABC service’s profit margin is 5% and its payout ratio is 60%. How large a sales increase can the company achieve without having to raise funds externally?
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