Balance Sheet (in dollars) for the Year Ending December 31, 2018

Cash

12,000

Notes payable

11,000

Accounts receivable

24,000

Accounts payable

16,000

Inventory

46,000

Accruals

3,000

Current assets

82,000

Current portion LD debt

7,000

Net fixed assets

156,000

Current liabilities

37,000

Total assets

238,000

LT Debt

66,000

Common stock ($2.00 par value)

20,000

Additional paid in capital

67,000

Retained earnings

48,000

Total liabilities & equity

238,000

1. Sales for Sherman, Inc. in 2018 were $700,000. The projected net profit margin for 2019 is 5 percent. If all assets and all spontaneous liabilities (i.e., accounts payable and accruals) grow as a percent of sales, and if Sherman plans to pay out 70 percent of all net income as dividends in 2019, what is Sherman's sustainable growth rate for 2019?

2. Sales for 2018 were $550,000. The 2019 projected net profit margin is 3.5%. Sherman plans to pay a total dividend of $3,000 in 2019. Assuming that all current assets and all current liabilities except for current portion of LT debt grow as a percent of sales (i.e., current portion of LT debt does not change), what is sustainable growth rate for 2019?

3. Sales for Sherman, Inc. in 2018 were $850,000. The 2019 projected net profit margin is 4.8%. Sherman plans to pay out 72 percent of net income as dividends in 2019. Assuming that cash does not change from its 2018 level, accounts receivable and inventory grow as a percent of sales, net fixed assets grow at 60% of the growth rate in sales, and all current liabilities grow as a percent of sales, what is sustainable growth rate for 2019?

4. Sales for 2018 were $600,000. The 2019 projected net profit margin is 6.0%. Sherman plans to pay a total dividend of $25,000 in 2019. Assuming that all current assets and all spontaneous liabilities (i.e., accounts payable and accruals) grow as a percent of sales, that net fixed assets grow at 45 percent of the growth rate in sales, and that 2,000 additional shares of stock will be sold by Sherman in 2019 for $3.00 per share, what is Sherman's sustainable growth rate for 2019?

5. Sherman forecasts that sales in 2019 will be $1,125,000. The 2019 projected net profit margin is 1.0% and Sherman plans to pay a dividend in 2019 of $0.40 per share. Assuming that all current assets will grow as a percent of sales, that net fixed assets will grow by $25,000 (this is the total cost of a new factory that Sherman will build in 2019), that Sherman's 2019 current ratio will be 2.0, that Sherman's debt ratio (i.e., total liabilities divided by total assets) will be the same in 2019 as it is in 2018, what is Sherman's sustainable growth rate for 2019?