Question
GBK, Inc. has sales of 10,552; total assets of 6210; and a debt-equity ratio of 1.40. If its return on equity is 15%, what is
GBK, Inc. has sales of 10,552; total assets of 6210; and a debt-equity ratio of 1.40. If its return on equity is 15%, what is its net income? (You may, or may not, find the Du Pont Identity helpful.)
Problem 2-2
You have collected the following information about Your Firm, Inc.: Sales = 215,000 Net Income = 19,200 Dividends = 10,200 Total Debt = 96,000 Total Equity = 64,000
A] What is the sustainable growth rate for Your Firm, Inc.? B] If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? C] What growth rate could be supported with no outside financing at all?
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