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The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, Costs include interest. Assume that Eagle s assets are proportional
The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, Costs include interest. Assume that Eagles assets are proportional to its sales. Assume a growth rate of in revenue, expenses, and assets in The tax rate will remain constant.
Income Statement
Sales $
Costs
Pretax income $
Taxes at
Net income $
Balance Sheet, YearEnd
Net assets $ $ Debt $ $
Equity
Total $ $ Total $ $
Assume that the dividend payout ratio is fixed at and the equitytoasset ratio is fixed at twothirds.
What is the sustainable growth rate for
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