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Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 900 Costs 170
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales.
INCOME STATEMENT, 2019 | |||
Sales | $ | 900 | |
Costs | 170 | ||
Interest | 50 | ||
Taxes | 120 | ||
Net income | $ | 560 | |
BALANCE SHEET, YEAR-END | ||||||||||||||||
2018 | 2019 | 2018 | 2019 | |||||||||||||
Assets | $ | 3,150 | $ | 3,450 | Debt | $ | 1,050 | $ | 1,150 | |||||||
Equity | 2,100 | 2,300 | ||||||||||||||
Total | $ | 3,150 | $ | 3,450 | Total | $ | 3,150 | $ | 3,450 | |||||||
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 60% 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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