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What is the sustainable growth rate

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Reference no: EM132821177

The most recent financial statements for Burnaby Co. are shown here:

Statement of Comprehensive Incom

Sales$13,250

Costs 9,480

Taxable income$3,770

Taxes (40%) 1,508

Net income$2,262

Statement of Financial Position

Current assets$10,400

Fixed assets 28,750

Total$39,150

Debt$17,500

Equity 21,650

Total$39,150

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

Problem 1: What is the sustainable growth rate?

Reference no: EM132821177

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