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 to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement Sales Costs $ 3,350 1,450 Pretax income Taxes (at 40.0%) $ 1,900 760 Net income $ 1,140 2022 Balance Sheet, Year-End 2021 Net assets $ 5,400 $ 5,100 Total $ 5,400 $ 5,100 Debt Equity Total 2022 $ 2,200 3,200 2021 $ 2,100 3,000 $ 5,400 $ 5,100 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023?

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 to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement Sales Costs $ 3,350 1,450 Pretax income Taxes (at 40.0%) $ 1,900 760 Net income $ 1,140 2022 Balance Sheet, Year-End 2021 Net assets $ 5,400 $ 5,100 Total $ 5,400 $ 5,100 Debt Equity Total 2022 $ 2,200 3,200 2021 $ 2,100 3,000 $ 5,400 $ 5,100 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 15P: Use the following income statement of Elliott Game Theory Consulting to determine its net operating...

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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 to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Sales Income Statement Costs $ 2,750 1,150 Pretax income Taxes (at 30.0%) $ 1,600 480 Net income $ 1,120 2021 Balance Sheet, Year-End 2022 Net assets $ 4,800 $ 4,500 Debt Total $ 4,800 $ 4,500 Equity Total 2022 $ 1,900 2,900 2021 $1,800 2,700 $ 4,800 $4,500 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Internal growth rate b. Sustainable growth rate % %
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 to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2020. The tax rate will remain constant. Income Statement Sales Costs Pretax income Taxes (at 40.0%) Net income 2019 Net assets $5,400 Total $3,350 1,450 $1,900 760 $1,140 Balance Sheet, Year-End 2018 $5,100 $5,400 $5,100 2019 $2,200 3,200 Debt Equity Total $5,400 6.42 x % a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed. What is the internal growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) X Answer is complete but not entirely correct. Internal growth rate 2018 $2,100 3,000 $ 5,100 b. What is the sustainable growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal…
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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 to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2020. The tax rate will remain constant. Income Statement Sales Costs Pretax income Taxes (at 40.0%) Net income Net assets Total 2019 $5,400 $5,400 Internal growth rate $3,350 1,450 $1,900 760 $1,140 Balance Sheet, 2018 $5,100 Sustainable growth rate $ 5,100 Year-End % Debt Equity Total a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed. What is the internal growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) 2019 $ 2,200 3,200 $5,400 2018 $ 2,100 3,000 $ 5,100 b. What is the sustainable growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) %
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