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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
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 a net income of $5 million. The company distributed $1.85 million as dividends to its shareholders last year. What is the firm's self-supporting growth rate? O 0.62% 1.06% O 0.70% 2.34% 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 must issue the same number of new common shares that it issued last year. 0 The firm maintains a constant net profit margin. The firm uses all equity and no debt financing
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