Calculate R&E's sustainable growth rate in each year from 2015 through 2018. Assume the dividend payout ratio was the same in 2015-17 as forecasted in 2018

 

2018 ($ thousands) A B D Year 2017 Actual 2018 2019 3 Net nales $20,613 4 Growth rate in net salcs 25.0% 5 Cost of gooda sold/net salcs 6 Gen., acll., and admin. expensea/net sales 7 Long-term debt 8 Current portion long-term debt 86.0% 12.0% $ 760 $660 $ 100 $100 9 Interest rate 10.0% 10 | Tax rate 45.0% 11 Dividend/carninga after tax 50.0% 12 Current asacta/net salca 29.0% 13 Net fixed assets $280 14 Current liabilitica/net salca 14.5% 15 Owners' equity $ 1,730 16 INCOME STATEMENT 17 Equations Forecast Forecast 18 Year 2018 2018 2019 19 Net salcs = B3 + B3 * C4 $25,766 Cost of goods sold Gross profit Gen., aell., and admin. exp. 20 =C5 * C19 22,159 21 = C19 -C20 3,607 = C6 * C19 = C9 * (C7 + C8 + C40) 22 3,092 23 Interest expense 231 24 Earninga before tax = C21 - C22 - C23 285 25 = C10 * C24 128 26 Barninga after tax 27 Dividenda paid 28 Additiona to retained carninga = C24 - C25 156 = C11 * C26 78 = C26 - C27 78 29 30 BALANCE SHEET = C12 * C19 = C13 = C31 + C32 31 Current asacta 7,472 32 Net fixed assets 280 33 Total anscta 7,752 34 35 Current liabilitica = C14 * C19 3,736 36 Long-term debt Owners' equity = C7 660 = B15 + C28 1,808 6,204 37 38 Total liabilitics and owners" = C35 + C36 + C37 39 oquity 40 EXTERNAL FUNDING REQUIRED = C33 - C38 $1,548