Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 850 Costs 160 Interest Taxes 40 110 Net income $ 540 BALANCE SHEET, YEAR-END 2018 Assets $ 3,000 2019 $ 3,300 Total $ 3,000 $ 3,300 Debt Equity Total 2018 $ 1,000 2,000 2019 $ 1,100 2,200 $ 3,000 $ 3,300 a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 70% and the equity-to-asset ratio is fixed at 2/3? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the sustainable growth rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 850 Costs 160 Interest Taxes 40 110 Net income $ 540 BALANCE SHEET, YEAR-END 2018 Assets $ 3,000 2019 $ 3,300 Total $ 3,000 $ 3,300 Debt Equity Total 2018 $ 1,000 2,000 2019 $ 1,100 2,200 $ 3,000 $ 3,300 a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 70% and the equity-to-asset ratio is fixed at 2/3? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the sustainable growth rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter1: The Role Of Accounting In Business
Section: Chapter Questions
Problem 1.4.2MBA: Return on assets The following data (in millions) were adapted from recent financial statements of...
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