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3. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting growth model helps a firm
3. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider this case: Bohemian Manufacturing Company has no debt in its capital structure and has $300 million in assets. Its sales revenues last year were $ 120 million with net income of $5 million. The company distributed $1.80 million as dividends to its shareholders last year. What is the firm's self-supporting, growth rate? (Note: Do not round your intermediate calculations.) O 0.60% O 0.71% O 2.32% O 1.08% Which of the following are assumptions of the self-supporting growth model? Check all that apply. The firm's total asset turnover ratio remains constant. The firm maintains a constant net profit margin. The firm's liabilities and equity must increase at the same rate. The firm maintains a constant ratio of liabilities to equity
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