Question
Medifast,Inc., is a producer and marketer of weight-loss meals and other health and weight-loss products. Following are selected finfncial data for the company for the
Medifast,Inc., is a producer and marketer of weight-loss meals and other health and weight-loss products. Following are selected finfncial data for the company for the priod 2006-2010.
2006 | 2007 | 2008 | 2009 | 2010 | |
Profit margin(%) | 6.00 | 7.00 | 4.60 | 5.20 | 7.20 |
Retention Ration (%) | 99.50 | 100.00 | 100.00 | 100.00 | 100.00 |
Asset turnover (X) | 1.33 | 2.02 | 1.92 | 2.07 | 2.64 |
Fianacial leverage (X) | 1.61 | 1.69 | 1.57 | 1.57 | 1.64 |
Growth rate in sales | 46.80 | 84.60 | 13.10 | 25.90 | 57.10 |
Referring to 2010 only: i. What value for the profit margin would have brought Medifast into balanced growth? ii. What value for asset turnover would have brought Medifast into balanced growth? iii. What value for financial leverage would have brought Medifast into balanced growth? Additionally, what % of assets was financed with equity given the leverage ratio of 1.6, and what % of assets would have been financed with equity is given your leverage ratio consistent with balanced growth?
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