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5. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps
5. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, 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 the following case of Blue Elk Manufacturing: Blue Elk Manufacturing has no debt in its capital structure and has $150,000,000 in assets. Its sales revenues last year were $90,000,000 with a net income of $3,000,000. The company distributed $130,000 as dividends to its shareholders last year. Given the information above, what is Blue Elk Manufacturing's sustainable growth rate? 0.09% O 4.57% O 1.95% O 0.61% Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all that apply. Common stock is the firm's only form of equity. The firm maintains a constant net profit margin. O The firm mainta constant rat of liabilities to equity. The firm must issue the same number of new common shares that it issued last year
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