In: Accounting
a. Use the information below from Tournament Sporting Goods annual financial statements to calculate the actual and sustainable growth rate for each year.
b. Do you think Tournament Sporting Goods is having a problem financing its growth? Is the increase in dividends a good idea for the company?
.
b.
In every year, the actual growth rate of a firm is more than the sustainable growth rate every year. Hence, it can be concluded that the firm has achieved its rapid growth by increasing its financial leverage.
In Increase in dividends is not a good idea as it only increases the problems related to its sustainable growth.
Increase in dividends is not a good idea as it only increases the problems related to its sustainable growth.