Problem 2-7 Building a Balance Sheet The following table presents the long-term liabilities and stockholders’ equity of Information Control Corp. one year ago: Long-term debt $ 66,600,000 Preferred stock 4,160,000 Common stock ($1 pa

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

Income Statement

Balance Sheet

  Sales

$

38,600

Current assets

$

23,000

Long-term debt

$

40,000

  Costs

29,300

Fixed assets

78,000

Equity

61,000

  Taxable income

$

9,300

  Total

$

101,000

  Total

$

101,000

  Taxes (34%)

3,162

    Net income

$

6,138

Assets and costs are proportional to sales. The company maintains a constant 25 percent dividend payout ratio and a constant debt–equity ratio.

What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

  Maximum increase in sales

$ [removed]  

A company has net income of $198,000, a profit margin of 8.8 percent, and an accounts receivable balance of $137,370. Assuming 70 percent of sales are on credit, what is the company’s days’ sales in receivables? (Use 365 days a year. Do not round intermediate calculation and round your final answer to 2 decimal places. (e.g., 32.16))

  Days' sales in receivables

[removed]days