Martin Aerospace is currently operating at full capacity based on its current level of assets. Sales are expected to increase by 4.5 percent

A firm's net working capital and all of its expenses vary directly with sales. The firm is operating currently at 96 percent of capacity. The firm wants no additional external financing of any kind. Which one of the following statements related to the firm's pro forma statements for next year must be correct?    A.  Total liabilities will remain constant at this year's value. B.  The maximum rate of sales increase is 4 percent. C.  The firm cannot exceed its internal rate of growth. D.  The projected owners' equity will equal this year's ending equity balance. E.  Fixed assets must remain constant at the current level.

28.

Which one of the following will increase the maximum rate of growth a corporation can achieve?    A.  avoidance of external equity financing B.  increase in corporate tax rates C.  reduction in the retention ratio D.  decrease in the dividend payout ratio E.  decrease in sales given a positive profit margin

29.

Martin Aerospace is currently operating at full capacity based on its current level of assets. Sales are expected to increase by 4.5 percent next year, which is the firm's internal rate of growth. Net working capital and operating costs are expected to increase directly with sales. The interest expense will remain constant at its current level. The tax rate and the dividend payout ratio will be held constant. Current and projected net income is positive. Which one of the following statements is correct regarding the pro forma statement for next year?    A.  The pro forma profit margin is equal to the current profit margin. B.  Retained earnings will increase at the same rate as sales. C.  Total assets will increase at the same rate as sales. D.  Long-term debt will increase in direct relation to sales. E.  Owners' equity will remain constant.