Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 3, Problem 26QAP
Summary Introduction
To Interpret: The computed values.
Introduction: The cash flow statement of any company represents the inflow and outflow of cash during the specified period. Along with the amount, it states the reason for the flow of cash.
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Loreto Inc. has the following financial ratios: asset turnover = 1.60; net profit margin (i.e., net income/sales) = 6%; payout ratio = 30%; equity/assets = 0.50.
a. What is Loreto's sustainable growth rate?
b. What is its internal growth rate?
(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
A. Sustainable growth rate _______%
B. Internal growth rate ______%
You've collected the following information about Caccamisse, Incorporated:
Sales
Net income
Dividends
Total debt
Total equity
=
a. Sustainable growth rate
b. Additional borrowing
c. Growth rate
=
=
=
=
$ 330,000
$ 18,700
$ 7,500
$ 70,000
$ 101,000
a. What is the sustainable growth rate for the company?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity
ratio?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
c. What growth rate could be supported with no outside financing at all?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
%
%
The Stieben Company has determined that the following will be true next year:
T(ratio of total assets of sales)=1
P(net profit of margin)=5%
d(dividend pay out ratio)=50%
L(debt equity ratio)=1
a) What is Stieben's sustainable growth rate in sales?
b)Can Stieben's actual growth rate in sales be different from its sustainable growth rate?
Why or why not?
c) How can Stieben change its sustainable growth?
Chapter 3 Solutions
Corporate Finance
Ch. 3 - Financial Ratio Analysis A financial ratio by...Ch. 3 - Industry-Specific Ratios So-called same-store...Ch. 3 - Sales Forecast Why do you think most long-term...Ch. 3 - Sustainable Growth In the chapter, we used...Ch. 3 - EFN and Growth Rate Broslofski Co. maintains a...Ch. 3 - Common-Size Financials One tool of financial...Ch. 3 - Asset Utilization and EFN One of the implicit...Ch. 3 - Comparing ROE and ROA Both ROA and ROE measure...Ch. 3 - Ratio Analysis Consider the ratio EBITD/Assets....Ch. 3 - Return on Investment A ratio that is becoming more...
Ch. 3 - Use the following information to answer the next...Ch. 3 - Prob. 12CQCh. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - DuPont Identity If Muenster, Inc., has an equity...Ch. 3 - Equity Multiplier and Return on Equity Synovec...Ch. 3 - Prob. 3QAPCh. 3 - EFN The most recent financial statements for...Ch. 3 - Prob. 5QAPCh. 3 - Sustainable Growth If the Moran Corp. has an ROE...Ch. 3 - Prob. 7QAPCh. 3 - Prob. 8QAPCh. 3 - Prob. 9QAPCh. 3 - Prob. 10QAPCh. 3 - Prob. 11QAPCh. 3 - Prob. 12QAPCh. 3 - External Funds Needed The Optical Scam Company has...Ch. 3 - Days' Sales in Receivables A company has net...Ch. 3 - Prob. 15QAPCh. 3 - Prob. 16QAPCh. 3 - Prob. 17QAPCh. 3 - Prob. 19QAPCh. 3 - Prob. 20QAPCh. 3 - Calculating EFN The most recent financial...Ch. 3 - Prob. 22QAPCh. 3 - Prob. 23QAPCh. 3 - Prob. 26QAPCh. 3 - Prob. 27QAPCh. 3 - Prob. 28QAPCh. 3 - Prob. 29QAPCh. 3 - Prob. 30QAPCh. 3 - Calculate all of the ratios listed in the industry...Ch. 3 - Prob. 2MCCh. 3 - Prob. 3MCCh. 3 - Prob. 4MCCh. 3 - Prob. 5MC
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