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What is the sustainable growth rate for your firm inc

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Reference no: EM132011254

Problem 1 - GBK, Inc. has sales of 10,552; total assets of 6210; and a debt-equity ratio of 1.40. If its return on equity is 15%, what is its net income? (You may, or may not, find the Du Pont Identity helpful.)

Problem 2 - You have collected the following information about Your Firm, Inc.:

Sales = 215,000

Net Income = 19,200

Dividends = 10,200

Total Debt = 96,000

Total Equity = 64,000

A] What is the sustainable growth rate for Your Firm, Inc.?

B] If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio?

C] What growth rate could be supported with no outside financing at all?

Reference no: EM132011254

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