1. Based on the 2015 financial statements relationships of Halloween Exports above, estimate the firms sustainable sales growth rate. What was its retention rate?

Hint: The formula for sustainable growth rate is given by:

where E = Stockholders Equity = Common Stock (par) + Additional Paid-in Capital + Retained Earnings

2. In its first year, Sluggers Company had revenues of $300,000 and cost of goods sold of $210,000, which was the only variable cost. Depreciation expense was $25,000, and cash expenses were interest expenses of $20,000, admin expenses of $50,000, and marketing expenses of $50,000 all of which were fixed. What is the survival breakeven revenue (SR)?

(Hint: SR = CFC / (1 - VCRR), where CFC: cash fixed costs, and VCRR = variable costs / revenue)

3. The portion of the sale of a product that contributes to covering the cash fixed costs is referred to as

the:

gross profit margin.

operating profit margin.

contribution profit margin.

net profit margin.

HALLOWEEN EXPORTS CORPORATION IncomeStatementNetSalesCostofGoodsSoldGrossProfitMarketingGeneral&AdministrativeDepreciationEBITInterestEarningsBeforeTaxesIncomeTaxes(40%rate)NetIncome2015$1,600,000960,000640,000160,000150,00055,000275,00055,000220,000$132,000$2013,000