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Here are the abbreviated financial statements for Planners Peanuts: INCOME STATEMENT, 2019 Sales $ 3,500 Cost 2,700 Net income $ 800 BALANCE SHEET, YEAR-END 2018
Here are the abbreviated financial statements for Planners Peanuts:
INCOME STATEMENT, 2019 | |||
Sales | $ | 3,500 | |
Cost | 2,700 | ||
Net income | $ | 800 | |
BALANCE SHEET, YEAR-END | |||||||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||||||
Assets | $ | 4,500 | $ | 5,000 | Debt | $ | 833 | $ | 1,000 | ||||||||||
Equity | 3,667 | 4,000 | |||||||||||||||||
Total | $ | 4,500 | $ | 5,000 | Total | $ | 4,500 | $ | 5,000 | ||||||||||
Assume the payout ratio is 50%.
a. Calculate the internal growth rate where no external debt or equity is to be issued. (Do not round intermediate calculations. Enter your answer as a whole percent.)
b. Calculate the sustainable growth rate where the firm maintains a fixed debt ratio but issues no equity. (Do not round intermediate calculations. Enter your answer as a whole percent.)
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