Subject: Business / Finance
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?