Question

As CFO of FINC LLC, you forecast company’s growth for the year 2018:

     Sales, all income statement items and Assets will grow by the same percentage;

     The firm will grow in 2018 with internally generated capital ONLY, without taking on any additional external  financing, neither debt nor equity;

     No dividend payout is expected in 2018.

1) Find this Internal Growth Rate.

2) Use this growth rate to complete 2018 financial statements. Ensure the numbers add up.

FINC LLC
Financial Statements
Income Statement				Balance Sheet
	2017		Projected 2018		2017 End		2018 End projected		2017 End		2018 End projected
Sales	$1,000			Assets	$2,520			Debt	$1,200
Costs	850
Taxable income	150							Equity	$1,320
Taxes (20%)	30
Net income	$120			Total	$2,520			Total	$2,520

Answer 1

Net income for 2017 is 120

Equity at the end of 2018 is 1320

Equity before profit is 1320-120 = 1200

Growth rate in Company = 120/1200 = 10%

Projected finacial statement for 2018

FINC LLC
Financial Statements
Income Statement			Balance Sheet
Year	2017	2018			2017	2018		2017	2018
Sales	1000	1100		Assets	2520	2772	Debt	1200	1320
Costs	850	935					Equity	1320	1452
Taxable income	150	165
Taxes 20%	30	33
Net Income	120	132			2520	2772		2520	2772