The Most Recent Financial Statements for Heng Co

question 2

Multiple Choice

The most recent financial statements for Heng Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 40 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)$5,987.48
• D)$6,493.74
• E)$6,666.67

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Definitions:

Strategic Pricing

Involves setting prices based on market factors, competition, and company goals to maximize profitability or market share.

Product Differentiation

A marketing strategy that businesses use to distinguish their products from those of competitors by emphasizing unique features, quality, or design.

Purely Competitive

A market structure characterized by a large number of firms producing homogenous products and where no single firm has significant control over the market price.

Inelastic Demand

A situation where the demand for a good or service is not significantly changed by the changes in its price.