Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 1,050 Costs 200

Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales.

INCOME STATEMENT, 2019
Sales $ 1,050
Costs 200
Interest 80
Taxes 150
Net income $ 620

BALANCE SHEET, YEAR-END
2018 2019 2018 2019
Assets $ 3,600 $ 3,900 Debt $ 1,200 $ 1,300
Equity 2,400 2,600
Total $ 3,600 $ 3,900 Total $ 3,600 $ 3,900

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Making Of Finance

Authors: Isabelle Chambost, Marc Lenglet, Yamina Tadjeddine

1st Edition

1138498572, 978-1138498570

More Books

Students also viewed these Finance questions

Question

=+The slowest recovery?

Answered: 1 week ago