You’ve collected the following information about Erna, Inc.: Sales = $ 300,000 Net income = $ 18,100 Dividends = $ 6,900 Total debt = $ 64,000 Total equity = $ 95,000 What is the sustainable growth...

90.2K

Verified Solution

Question

Finance

You’ve collected the following information about Erna, Inc.:
Sales = $ 300,000
Net income = $ 18,100
Dividends = $ 6,900
Total debt = $ 64,000
Total equity = $ 95,000
What is the sustainable growth rate for the company? (Donot round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.)

Sustainable growth rate           %

Assuming it grows at this rate, how much new borrowing will takeplace in the coming year, assuming a constant debt–equity ratio?(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

Additional borrowing           $

What growth rate could be supported with no outside financing atall? (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g.,32.16.)

Growth rate           %

Answer & Explanation Solved by verified expert

4.2 Ratings (714 Votes)

SEE THE See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

You’ve collected the following information about Erna, Inc.:Sales=$300,000Net income=$18,100Dividends=$6,900Total debt=$64,000Total equity=$95,000What is the sustainable growth rate for the company? (Donot round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate % Assuming it grows at this rate, how much new borrowing will takeplace in the coming year, assuming a constant debt–equity ratio?(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.) Additional borrowing $ What growth rate could be supported with no outside financing atall? (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g.,32.16.) Growth rate %


Sales	=	$	300,000
Net income	=	$	18,100
Dividends	=	$	6,900
Total debt	=	$	64,000
Total equity	=	$	95,000