Question

You’ve collected the following information about Erna, Inc.:

Sales | = | $ | 305,000 | |

Net income | = | $ | 18,200 | |

Dividends | = | $ | 7,000 | |

Total debt | = | $ | 65,000 | |

Total equity | = | $ | 96,000 | |

What is the sustainable growth rate for the company? **(Do
not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
**

Sustainable growth rate %

Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt–equity ratio?

Additional borrowing $

What growth rate could be supported with no outside financing at all?

Growth rate %

Answer #1

Calculate the growth rate and additional borrowing as follows:

Formulas:

You’ve collected the following information about Draiman,
Inc.:
Sales $ 230,000
Net income $ 15,200
Dividends $ 9,600
Total debt $ 92,000
Total equity $ 68,000
1. What is the sustainable growth rate for the company? (Do not
round intermediate calculations. Enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate
%
2. If it does grow at this rate, how much new borrowing will
take place in the coming year, assuming a constant...

You've collected the following information about Molino, Inc.:
Sales $ 215,000 Net income $ 17,300 Dividends $ 9,400 Total debt $
77,000 Total equity $ 59,000 a. What is the sustainable growth rate
for the company? (Do not round intermediate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. If it does grow at this rate, how much new borrowing will take
place in the coming year, assuming a constant debt-equity ratio?
(Do...

You’ve collected the following information about Sully,
Inc.:
Profit margin
=
4.43
%
Total asset turnover
=
3.40
Total debt ratio
=
.26
Payout ratio
=
28
%
What is the sustainable growth rate for the company? (Do
not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
Sustainable growth rate
%
What is the ROA? (Do not round intermediate calculations
and enter your answer as a percent rounded to...

You’ve collected the following information about Odyssey,
Inc.:
Sales
$
209137
Net income
$
14526
Dividends
$
3887
Total debt
$
55951
Total equity
$
68786
If the company grows at the sustainable growth rate, how much
new borrowing will take place in the coming year, assuming a
constant debt–equity ratio?
(Omit the "$" sign and commas in your response. Enter
your answer rounded to 2 decimal places. For example, $1,200.456
should be entered as 1200.46.)

You’ve collected the following information about Odyssey,
Inc.:
Sales
$
200274
Net income
$
10254
Dividends
$
3231
Total debt
$
72046
Total equity
$
62690
If the company grows at the sustainable growth rate, how much
new borrowing will take place in the coming year, assuming a
constant debt–equity ratio?
(Omit the "$" sign and commas in your response. Enter
your answer rounded to 2 decimal places. For example, $1,200.456
should be entered as 1200.46.)

You’ve collected the following information about Odyssey,
Inc.:
Sales
$
241,813
Net income
$
10,096
Dividends
$
4,376
Total debt
$
95,501
Total equity
$
63,883
If the company grows at the sustainable growth rate, how much
new borrowing will take place in the coming year, assuming a
constant debt–equity ratio? (round 2 decimal places)

You' ve
collected the following information about St. Pierre, Inc.:
Sales
$150,000
Net
income
$18,000
Dividends
$10,000
Total debt
$89,000
Total equity
$57,000
Required:
(a)
The sustainable growth
rate for St. Pierre, Inc. is percent. (Do not include the
percent sign (%). Round your answer to 2 decimal places. (e.g.,
32.16))
(b)
If it does grow at
this rate, $ in new borrowing will take place in the coming year,
assuming a constant debt-equity ratio. (Do not include the
dollar...

You’ve collected the following information about Odyssey, Inc.:
Sales $ 207748 Net income $ 10537 Dividends $ 4301 Total debt $
87359 Total equity $ 62684 If the company grows at the sustainable
growth rate, how much new borrowing will take place in the coming
year, assuming a constant debt–equity ratio?

High Flyer, Inc., wishes to maintain a growth rate of 15.75
percent per year and a debt–equity ratio of .85. The profit margin
is 4.9 percent, and total asset turnover is constant at 1.09.
What is the dividend payout ratio? (A negative answer
should be indicated by a minus sign. Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Dividend payout ratio
%
What is the maximum...

Profit margin
=
10.3
%
Capital intensity ratio
=
.64
Debt−equity ratio
=
.79
Net income
=
$
114,000
Dividends
=
$
53,500
Based on the above information, calculate the sustainable growth
rate for Southern Lights Co. (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Sustainable growth rate
%

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