Financial Risks: Describe the potential impacts of the following types of financial risk on the company featured in the case study:

(1) Interest Rate Risk:

(2) Economic Risk:

(3) Credit risk

(4) Operational risk

Lower Growth Impact: Explain the impact that a lower growth in sales could have on the dividend policy and retained earnings for the company described in the case study.

Higher Growth Impact: Explain the impact that a higher growth in sales could have on the dividend policy and retained earnings for the company described in the case study.

Table A Company Financials Assuming a 25\% Increase in Sales (\$ in millions) a It is assumed (1) that the firm earns $60 million (a 15\% return on beginning of year equity) and pays out $18 million as a cash dividend; and (2) that there is no required debt repayment in 2010 . Exhibit 1 SciTronics, Inc. Consolidated Income Statements 2005-2008 (\$ in thousands) Exhibit 2 SciTronics, Inc. Consolidated Balance Sheet at December 31, 2005-2008 (\$ in thousands) Exhibit 3 Unidentified Industries A B C D E Balance Sheet Percentages Selected Ratios Net profitet sales Return on capital Return on equity Sales/total assets Collection period (days) Days of inventory Saleset property \& equipment Total assets/equity Total liabilities/total assets Interest-bearing debt/total capital Times interest earned Current assets/current liabilities 10.3%6.8%12.5%.325243.433.73.7359%3.2.671.5%9.2%10.8%3.254326.72.19.5419%161.115.1%12.6%28.1%1.3186623.84.19.7662%6.02.011.3%0.9%2.2%.63232312.92.79.6653%4.41.22(5.8%)(3.1%)(7.6%).65431473.62.01.5032%NM1.85 Source: Casewriter