Question
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 1,200 Costs 230
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales.
| INCOME STATEMENT, 2019 | |||
| Sales | $ | 1,200 | |
| Costs | 230 | ||
| Interest | 40 | ||
| Taxes | 180 | ||
| Net income | $ | 750 | |
| BALANCE SHEET, YEAR-END | ||||||||||||||||
| 2018 | 2019 | 2018 | 2019 | |||||||||||||
| Assets | $ | 4,050 | $ | 4,350 | Debt | $ | 1,350 | $ | 1,450 | |||||||
| Equity | 2,700 | 2,900 | ||||||||||||||
| Total | $ | 4,050 | $ | 4,350 | Total | $ | 4,050 | $ | 4,350 | |||||||
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 70% and the equity-to-asset ratio is fixed at 2/3? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. What is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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The Handbook Of Post Crisis Financial Modelling
Authors: Emmanuel Haven, Philip Molyneux, John Wilson, Sergei Fedotov, Meryem Duygun
1st Edition
1137494484, 978-1137494481
