Question
In: Finance
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
| The most recent financial statements for Live Co. are shown here: |
| Income Statement | Balance Sheet | ||||
| Sales | $3,900 | Current assets | $4,145 | Debt | $8,288 |
| Costs |
2,574 |
Fixed assets | 10,149 | Equity | 6,006 |
| Taxable income | $1,326 | Total |
$14,294 |
Total |
$14,294 |
| Taxes (35%) | 464 | ||||
| Net income |
$862 |
||||
| Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 26 percent dividend payout ratio. No external equity financing is possible. |
| Required: |
| What is the internal growth rate? (Do not round your intermediate calculations.) |
Multiple Choice
-
4.57%
-
1.59%
-
4.67%
-
4.77%
-
11.88%
Solutions
Expert Solution
Internal Growth Rate = Return on Assets * Retention Ratio
Return on Assets = Net Income/ Total Assets = 862/14,294 = 6.03%
Retention Ratio = 1-Dividend payout ratio = 1-26%=74%
IRR = 6.03*0.74 = 4.47%
jeff jeffy answered 2 years agoRelated Solutions
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
The most recent
financial statements for Live Co. are shown here:
Income Statement
Balance Sheet
Sales
$3,900
Current assets
$4,145
Debt
$8,288
Costs
2,574
Fixed assets
10,149
Equity
6,006
Taxable income
$1,326
Total
$14,294
Total
$14,294
Taxes (33%)
438
Net income
$888
Assets and costs
are proportional to sales. Debt and equity are not. The company
maintains a constant 18 percent dividend payout ratio. No external
equity financing is possible.
Required:
What is the
internal growth rate? (Do...
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Live Co. are shown
here:
Income Statement
Balance Sheet
Sales
$11,000
Current assets
$23,719
Debt
$23,377
Costs
6,600
Fixed assets
16,598
Equity
16,940
Taxable income
$4,400
Total
$40,317
Total
$40,317
Taxes (34%)
1,496
Net income
$2,904
Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 26 percent dividend payout
ratio. No external equity financing is possible.
Required:
What is the sustainable growth rate? (Do not round...
The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Live Co. are shown
here:
Income Statement
Balance Sheet
Sales
$3,900
Current assets
$4,145
Debt
$8,288
Costs
2,574
Fixed assets
10,149
Equity
6,006
Taxable income
$1,326
Total
$14,294
Total
$14,294
Taxes (35%)
464
Net income
$862
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The most recent financial statements for Alexander Co. are shown
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Long-term debt $64,800
Costs 38,400 Fixed assets 51,840
Equity 81,000 Taxable
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The most recent financial statements for Bello Co. are shown
here:
Income Statement
Balance Sheet
Sales
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Current assets
$
11,880
Debt
$
16,240
Costs
13,500
Fixed assets
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Equity
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Taxable income
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$
42,030
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The most recent financial statements for Beckett Co. are shown
here:
INCOME STATEMENT
BALANCE SHEET
Sales
$
76,700
Current assets
$
22,000
Long-term debt
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56,000
Costs
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Fixed assets
150,000
Equity
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Taxable income
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172,000
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Assets and costs are proportional to sales. The company
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What is the maximum increase in sales that...
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here:
Income Statement
Balance Sheet
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Current assets
$
11,300
Debt
$
15,800
Costs
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Equity
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Taxable income
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Income Statement
Balance Sheet
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Current assets
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Long-term debt
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Costs
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Income Statement
Balance Sheet
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Long-term debt
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