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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

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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 $75,000,000 with a net income of $2,500,000. The company distributed $160,000 as dividends to its shareholders last year. Given the information above, what is Blue Elk Manufacturing's sustainable growth rate? 0.779 O 1.58% 0 4.79% O 0.119 Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all that apply The firm must issue the same number of new common shares that it issued tast year. The firm maintains a constant net profit margin The firm uses all equity and no debt financing The firm maintains a constant ratio of assets to equity

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