Question
In: Finance
Problem 4-7 Calculating Sustainable Growth [LO3] The most recent financial statements for Bello Co. are shown...
Problem 4-7 Calculating Sustainable Growth [LO3]
|
The most recent financial statements for Bello Co. are shown here: |
| Income Statement | Balance Sheet | ||||||||||
| Sales | $ | 20,000 | Current assets | $ | 11,920 | Debt | $ | 16,360 | |||
| Costs | 13,700 | Fixed assets | 31,050 | Equity | 26,610 | ||||||
| Taxable income | $ | 6,300 | Total | $ | 42,970 | Total | $ | 42,970 | |||
| Taxes (22%) | 1,386 | ||||||||||
| Net income | $ | 4,914 | |||||||||
|
Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 45 percent dividend payout ratio. |
|
What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Bello Co. are shown
here: Income Statement Balance Sheet Sales $ 19,600 Current assets
$ 11,840 Debt $ 16,120 Costs 13,400 Fixed assets 29,250 Equity
24,970 Taxable income $ 6,200 Total $ 41,090 Total $ 41,090 Taxes
(24%) 1,488 Net income $ 4,712 Assets and costs are proportional to
sales. Debt and equity are not. The company maintains a constant 35
percent dividend payout ratio. What is the sustainable growth rate?
(Do not round...
The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Bello Co. are shown
here:
Income Statement
Balance Sheet
Sales
$
19,800
Current assets
$
11,880
Debt
$
16,240
Costs
13,500
Fixed assets
30,150
Equity
25,790
Taxable income
$
6,300
Total
$
42,030
Total
$
42,030
Taxes (24%)
1,512
Net
income
$
4,788
Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 35 percent dividend payout
ratio.
What is the internal growth rate?
The most recent financial statements for Bello Co. are shownhere: Income StatementBalance Sheet Sales...
The most recent financial statements for Bello Co. are shown
here: Income StatementBalance Sheet Sales$4,300 Current assets$4,570 Debt$9,138 Costs2,838 Fixed assets11,190 Equity6,622 Taxable income$1,462 Total$15,760 Total$15,760 Taxes (24%)351 Net income$1,111 Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 18 percent dividend payout
ratio.What is the internal growth rate?
Problem 4-7 Financial Ratios (LO3) Here are simplified financial statements for Phone Corporation in a recent...
Problem 4-7 Financial Ratios (LO3)
Here are simplified financial statements for Phone Corporation
in a recent year:
INCOME
STATEMENT
(Figures in $
millions)
Net sales
$
12,600
Cost of goods sold
3,760
Other expenses
4,127
Depreciation
2,338
Earnings before interest and taxes (EBIT)
$
2,375
Interest expense
655
Income before tax
$
1,720
Taxes (at 35%)
602
Net income
$
1,118
Dividends
$
816
BALANCE SHEET
(Figures in $ millions)
End of Year
Start of Year
Assets
Cash and...
The most recent financial statements for Bello, Inc., are shown here: Income Statement Balance Sheet...
The most recent financial statements for Bello, Inc., are shown
here:
Income Statement
Balance Sheet
Sales
$
40,200
Assets
$
148,000
Debt
$
43,500
Costs
27,300
Equity
104,500
Taxable income
$
12,900
Total
$
148,000
Total
$
148,000
Taxes (23%)
2,967
Net income
$
9,933
Assets and costs are proportional to sales; debt and equity are
not. A dividend of $3,450 was paid, and the company wishes to
maintain a constant payout ratio. Next year’s sales are projected...
The most recent financial statements for Bello, Inc., are shown here: Income Statement Balance Sheet...
The most recent financial statements for Bello, Inc., are shown
here:
Income Statement
Balance Sheet
Sales
$
39,600
Assets
$
145,000
Debt
$
42,000
Costs
27,000
Equity
103,000
Taxable income
$
12,600
Total
$
145,000
Total
$
145,000
Taxes (25%)
3,150
Net income
$
9,450
Assets and costs are proportional to sales; debt and equity are
not. A dividend of $3,300 was paid, and the company wishes to
maintain a constant payout ratio. Next year’s sales are projected...
Problem 4-4 EFN [LO2] The most recent financial statements for Cardinal, Inc., are shown here: Income...
Problem 4-4 EFN [LO2]
The most recent financial statements for Cardinal, Inc., are
shown here:
Income Statement
Balance Sheet
Sales
$
31,000
Assets
$
73,200
Debt
$
36,700
Costs
18,400
Equity
36,500
Taxable income
$
12,600
Total
$
73,200
Total
$
73,200
Taxes (22%)
2,772
Net income
$
9,828
Assets and costs are proportional to sales. Debt and equity are
not. A dividend of $3,700 was paid, and the company wishes to
maintain a constant payout ratio. Next year’s sales...
Problem 4-24 Calculating EFN [LO2] The most recent financial statements for Crosby, Inc., follow. Sales for...
Problem 4-24 Calculating EFN [LO2] The most recent financial
statements for Crosby, Inc., follow. Sales for 2018 are projected
to grow by 20 percent. Interest expense will remain constant; the
tax rate and the dividend payout rate will also remain constant.
Costs, other expenses, current assets, fixed assets, and accounts
payable increase spontaneously with sales.
CROSBY, INC. 2017 Income Statement
Sales $ 763,000 Costs 598,000 Other expenses 34,000 Earnings
before interest and taxes $ 131,000 Interest paid 30,000 Taxable
income...
Problem 4-24 Calculating EFN [LO2] The most recent financial statements for Crosby, Inc., follow. Sales for...
Problem 4-24 Calculating EFN [LO2]
The most recent financial statements for Crosby, Inc., follow.
Sales for 2018 are projected to grow by 25 percent. Interest
expense will remain constant; the tax rate and the dividend payout
rate will also remain constant. Costs, other expenses, current
assets, fixed assets, and accounts payable increase spontaneously
with sales.
CROSBY, INC.
2017 Income Statement
Sales
$
751,000
Costs
586,000
Other expenses
22,000
Earnings before interest and taxes
$
143,000
Interest paid
18,000
Taxable income...
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...
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