Sales $46,298,115

Cost of goods sold 34,536,913

Other expenses 5,870,865

Depreciation 2,074,853

EBIT $ 3,815,484

Interest 725,098

Taxable income $ 3,090,386

Taxes (21%) 772,597

Net income $ 2,317,789

Dividends $ 705,000

Add to retained earnings 1,612,789

S&S AIR, INC.

2018 Balance Sheet

Assets Liabilities and Equity

Current assets Current liabilities

Cash $ 524,963 Accounts payable $ 1,068,356

Accounts receivable 843,094 Notes payable 2,439,553

Inventory 1,235,161 Total current liabilities $ 3,507,909

Total current assets $ 2,603,218 Long-term debt $ 6,300,000

Fixed assets

Net plant and equipment $20,381,945 Shareholder equity Common stock $ 460,000

Retained earnings 12,717,254

Total equity $13,177,254

Total assets $22,985,163 Total liabilities and equity $22,985,163

QUESTIONS

1. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean?

2. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EFN for the company assuming the company is operating at full capacity. Can the companys sales increase at this growth rate