The most recent financial statements for Heng Co. are shown here:

The most recent financial statements for Heng Co. are shown here:    Assets and costs are proportional to sales. The company maintains a constant 45 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum increase in sales that can be sustained next year assuming no new equity is issued?    A.  $4,808.12 B.  $5,211.17 C.  $5,887.48 D.  $5,894.60 E.  $6,666.67 Return on equity = $13,068/$74,250 = 0.176 Retention ratio = 1 - .45 = .55 Sustainable growth rate = (0.176 × .55)/[1 - (0.176 × .55)] = .107174 Maximum increase in sales = $55,000 × .107174 = $5,894.60

86.	Consider the income statement for Heir Jordan Corporation:    A 22 percent growth rate in sales is projected. What is the pro forma addition to retained earnings assuming all costs vary proportionately with sales?    A.  $6,299 B.  $7,303 C.  $7,890 D.  $8,011 E.  $8,164

87.

The Soccer Shoppe has a 9 percent return on assets and a 25 percent payout ratio. What is its internal growth rate?    A.  4.72 percent B.  5.08 percent C.  5.49 percent D.  6.23 percent E.  7.24 percent Retention ratio = 1 - 0.25 = 0.75 Internal growth rate = (0.09 × 0.75)/[1 - (0.09 × 0.75)] = 7.24 percent