(Example 4-5)Lennar Homes has the following current financial results ($000).

Revenue $50,000 Assets $40,000

EAT $ 5,000 Equity $10,000

Dividends $ 2,000

On the average, other building companies pay about one tenth of their earnings in dividends, earn about ten cents on the sales dollar, carry assets worth about three months of sales, and finance one half of their assets with debt.

Use the sustainable growth rate concept to analyze Lennar's inherent ability to grow without selling new equity versus that of an average building company. Identify weak areas and suggest further analyses.

g_s = (1-d) ROS T/A Equity

Turnover Multiplier

= (1-d) x EAT/sales sales/assets assets/equity

= (1-d)EAT/equity

Lennar ____ = ______ x ________ x ________ x ________

Industry ____ = ______ x ________ x ________ x ________