Question
You've collected the following information about Erna, Inc.: Sales = $275,000 Net income = $19,000 Dividends = $8,100 Total debt = $67,000 Total equity =
You've collected the following information about Erna, Inc.:
Sales = $275,000
Net income = $19,000 Dividends = $8,100 Total debt = $67,000 Total equity = $91,000
What is the sustainable growth rate for the company? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? What growth rate could be supported with no outside financing at all?
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Essentials of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
8th edition
78034752, 978-0078034756
