Question

If sales growth for XYZ Inc. exceeds 6%, which in turn causes XYZ to seek external...

If sales growth for XYZ Inc. exceeds 6%, which in turn causes XYZ to seek external financing, then 6% is the

____

External growth rate

Internal growth rate

Optimal growth rate

Sustainable growth rate

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

B. Internal Growth rate.

XYZ inc. is growing its bussiness from sales which is the part of operation and when a firm grows through its operation it is internal growth rate.

Option A is invalid as beacuse the external growth rate means growth through the external factors such as mergers, amalgamation, Acquisation of Brands, Goodwill. In this case the growth generates from Sales not from outside factors.

Option C and D is totally invalid in this case as Optimal Growth rate is the rate of Optimum as per GDP of the coountry. and sustainable growth rate is the growth rate that is enough for the company to sustain in the market.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
External Financing Needed. Testaburger, Inc., uses no external financing and maintains a positive retention ratio. When...
External Financing Needed. Testaburger, Inc., uses no external financing and maintains a positive retention ratio. When sales grow by 15 percent, the firm has a negative projected EFN. What does this tell you about the firm’s internal growth rate? How about the sustainable growth rate? At this same level of sales growth, what will happen to the projected EFN if the retention ratio is increased? What if the retention ratio is decreased? What happens to the projected EFN if the...
Antivirus Inc. expects its sales next year to be $3,600,000. Inventory and accounts receivable will increase...
Antivirus Inc. expects its sales next year to be $3,600,000. Inventory and accounts receivable will increase by $590,000 to accommodate this sales level. The company has a steady profit margin of 12 percent with a 30 percent dividend payout. How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing. What are the external funds needed _______________
Antivirus Inc. expects its sales next year to be $3,300,000. Inventory and accounts receivable will increase...
Antivirus Inc. expects its sales next year to be $3,300,000. Inventory and accounts receivable will increase by $560,000 to accommodate this sales level. The company has a steady profit margin of 8 percent with a 15 percent dividend payout. How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.
1) Coventry Comfort, Inc. has equity of $168,500, total assets of $195,000, net income of $63,000,...
1) Coventry Comfort, Inc. has equity of $168,500, total assets of $195,000, net income of $63,000, and dividends of $37,800. Calculate the sustainable growth rate?          2) Delta Ice has a profit margin of 8.3 percent and a payout ratio of 42 percent. The firm has annual sales of $386,400, current liabilities of $37,200, long-term debt of $123,800, and net working capital of $16,700, and net fixed assets of $391,500. No external equity financing is possible. What is the internal growth...
You've collected the following information about Molino, Inc.: Sales $ 215,000 Net income $ 17,300 Dividends...
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 Draiman, Inc.: Sales $ 230,000 Net income $ 15,200 Dividends...
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...
Problem 4-6 Calculating Internal Growth [LO3] The most recent financial statements for Schenkel Co. are shown...
Problem 4-6 Calculating Internal Growth [LO3] The most recent financial statements for Schenkel Co. are shown here: Income Statement Balance Sheet   Sales $ 17,600 Current assets $ 10,700 Debt $ 15,200   Costs 12,000 Fixed assets 25,750 Equity 21,250   Taxable income $ 5,600     Total $ 36,450     Total $ 36,450   Taxes (40%) 2,240     Net income $ 3,360 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. No external financing...
To support growth strategies and combat competition with rivals, businesses seek external capital to further develop...
To support growth strategies and combat competition with rivals, businesses seek external capital to further develop products and services in hopes to create new sales opportunities. Since capital investment often involves a huge money investment, longer time engagement and risks of uncertainties, any decision shall not be taken lightly and shall be carefully evaluated before putting money to start a long-term project. The goal is to ultimately make the right accept/reject decision -Discuss criteria and techniques used to evaluate a...
Loreto Inc. has the following financial ratios: asset turnover = 1.60; net profit margin (i.e., net...
Loreto Inc. has the following financial ratios: asset turnover = 1.60; net profit margin (i.e., net income/sales) = 6%; payout ratio = 25%; equity/assets = 0.80. a. What is Loreto's sustainable growth rate? b. What is its internal growth rate?
You’ve collected the following information about Erna, Inc.: Sales = $ 305,000 Net income = $...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT