Question

In: Finance

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.

The most recent financial statements for Live Co. are shown here:
  Income Statement Balance Sheet
  Sales $10,000     Current assets $21,563     Debt $21,252  
  Costs

6,000  

   Fixed assets 15,089     Equity 15,400  
  Taxable income $4,000       Total

$36,652  

     Total

$36,652  
  Taxes (33%) 1,320  
    Net income

$2,680  

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.
Required:

What is the sustainable growth rate? (Do not round your intermediate calculations.)

Solutions

Expert Solution

jeff jeffy answered 3 years ago
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