Assets, accounts payable and costs are proportional to sales. Debt and equity are not.
The sales of Douglass Enterprises are expected to increase by 14% next year. The firm is currently producing at full capacity. Management wants to maintain a constant debt-equity ratio and a constant dividend payout ratio. What is the external financing need?

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The Answer of   Assets, accounts payable and costs are proportional to sales. Debt and equity are not.
The sales of Douglass Enterprises are expected to increase by 14% next year. The firm is currently producing at full capacity. Management wants to maintain a constant debt-equity ratio and a constant dividend payout ratio. What is the external financing need?

Assets, Accounts Payable and Costs Are Proportional to Sales