Assets, Accounts Payable and Costs Are Proportional to Sales

question 231

Multiple Choice

Assets, accounts payable and costs are proportional to sales. Debt and equity are not.
Sales of Wintergreen, Inc. are expected to increase by 6% next year. Wintergreen is currently operating at maximum capacity. Wintergreen has a 20% dividend payout ratio. What is the external financing need?

• A) -$196
• B) -$161
• C) $161
• D) $196
• E) $279

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