Anderson Inc. is in a fast growing industry, but the company's growth rate is far below that of the industry. Selected financial information for Anderson and the industry is as follows ($000): 

Industry: Growth rate:  20.5%       Dividend payout:    10%         Return on Sales:    4%         Total Asset Turnover: 1.9x    Debt:Equity:      2.0X   

 

Anderson: Growth rate:  3.75%      Dividend payout:  30%        Return on Sales:  5%           Total Asset Turnover; 2.0x   Debt:Equity:  0.25x

 

 

Required: 

 

a) Use a sustainable growth rate analysis to determine the source(s) of Anderson's growth problems. 

 

b) Identify 2 ways that Anderson can improve its growth and the possible disadvantages of making these changes.