What is the sustainable growth rate of the company

Reference no: EM132448605

Answer the following questions:

1. Calculate the expected Free Cash Flows from an operating, or asset perspective for 2019 and 2020, and explain how the cash flows wereutilized, and its impact on the expansion plan.How did the company finance its expansion programs?

2. What is the maximum growth rate the company can expand at without external financing?The company's dividends payout ratio is 25%.

3. What is the sustainable growth rate of the company?The company's dividends payout ratio is 25%.

4. Calculate the External Funds Needed (EFN) to finance the growth in 2020?

5. Investors would like to see the company sales grow at 25% in 2020. What would be the EFN required for this growth. Would you recommend a 25% sales growth? Why or why not?

6. Calculate all of the ratios listed in Table 3 for year 2020.

7. What is your assessment of the financial health of the company?What actions must be taken?

8. On the basis of data provided in the case, would you, as a credit manager, continue to sell to Carter on credit? Why? Similarly, if you were the bank loan officer, would you make a loan to Carter to finance its operations in 2020? Do you think investors should provide more than $1.2 million of new equity?Why?

Attachment:- Free cash flow.rar

Reference no: EM132448605

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