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Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 16% in 2019 and all assets and
Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 16% in 2019 and all assets and liabilities increase correspondingly.
a. If the payout ratio is set at 55% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes?
b. If the payout ratio is set at 55% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible growth rate for Archimedes?
Income Statement Sales Costs, including interest Net income $ 7,400 5,200 $2,200 Net assets Balance Sheet, Year-End 2018 2017 $ 6,549 $ 6, 100 Debt Equity $ 6,549 $ 6, 100 Total 2018 $ 2,849 3,700 $ 6,549 2017 $ 2,733 3,367 $ 6,100 TotalStep by Step Solution
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