Question
Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2021 to $9.2 million in 2022. Its operating assets were $5 million
Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2021 to $9.2 million in 2022. Its operating assets were $5 million at the end of 2021.
Broussard is already at full capacity, so its operating assets must grow at the same rate as projected sales. At the end of 2021, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after - tax profit margin is forcasted to be 6%, and the forecasted payout ratio is 40%.
Suppose the values for this problem change to:
Operating Assets: $5,293,861
After-Tax Profit Margin: 7.5%
Payout Ratio: 54.1%
What is the self-sustaining growth rate? You can use the formula in the textbook or use Excel's goal seek. Round your percentage to one decimal, i.e. you would enter 12.345% as 12.3.
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