Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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You've collected the following information about Molino, Inc.
190,000
Sales
Net income $13,600
Dividends 8,800
bt $ 76,000
60,000
Total equity
a. What is the sustainable growth rate for the company? (Do not round intermediate
b. If it does grow at this rate, how much new borrowing will take place in the coming
c. What growth rate could be supported with no outside financing at all? (Do not round
calculations and enter your answer as a percent rounded to 2 decimal places, e.g,
3216.)
year, assuming a constant debt-equity ratio? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
intermediate calculations and enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
Answer is complete but not entirely correct.
a. Sustainable growth rate
b. Additional borrowing
c. Internal growth rate
8.69 )%
6,600.92
3.65 196
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Transcribed Image Text:You've collected the following information about Molino, Inc. 190,000 Sales Net income $13,600 Dividends 8,800 bt $ 76,000 60,000 Total equity a. What is the sustainable growth rate for the company? (Do not round intermediate b. If it does grow at this rate, how much new borrowing will take place in the coming c. What growth rate could be supported with no outside financing at all? (Do not round calculations and enter your answer as a percent rounded to 2 decimal places, e.g, 3216.) year, assuming a constant debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. a. Sustainable growth rate b. Additional borrowing c. Internal growth rate 8.69 )% 6,600.92 3.65 196
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  • You’ve collected the following information about Odyssey, Inc.:Sales =$165,000Net income = $14,800Dividends = $9,300Total debt = $68,000Total equity = $51,000What is the sustainable growth rate for the company? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt –equity ratio? What growth rate could be supported with no outside financing at all?
    Suppose the profitable company, Hermes, Inc., previously calculated its external financing needs (EFN) to be $18,200,000. What will happen to the EFN if management now decides to decrease the dividend payout ratio from 35.00% to 25.00%? (1) It will increase to some value greater than $18,200,000. (2) It will fall to some value lower than $18,200,000. (3) It will remain at $18,200,000. (4) The answer depends on Hermes, Inc.’s growth rate in sales. (5) The answer depends on Hermes, Inc.’s profit margin.
    Wanbay Corporation is interested in estimating its additional financing needed to support a growth in sales next year. Last year, revenues were RM1million; net profit margin was 6 percent; investment in assets was RM750,000; payables and accruals were RM100,000; stockholders’ equity at the end of the year was RM450,000. The venture did not pay out any dividends and does not expect to pay dividends for the future. (a) Elaborate the concept of sustainable sales growth rates in relation to the additional fund needed (AFN) (b) Calculate the additional fund needed (AFN) next year to support a 30 percent increase in sales.
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