Question
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2017 Sales $ 1,550 Costs 300
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2017 Sales $ 1,550 Costs 300 Interest 40 Taxes 250 Net income $ 960 BALANCE SHEET, YEAR-END 2016 2017 2016 2017 Assets $ 5,100 $ 5,400 Debt $ 1,700 $ 1,800 Equity 3,400 3,600 Total $ 5,100 $ 5,400 Total $ 5,100 $ 5,400
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started