Wally is pleased with your work. He asks you for help on one more project - and
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| Wally is pleased with your work. He asks you for help on one more project - and then you can take a well-deserved break! He gives you this information that he has collected on one of IanCo's key subsidiaries, Oscar & Ollie Inc.: | |||||||||
| Sales = $165,000 | |||||||||
| Net Income = $14,800 | |||||||||
| Dividends = $5,300 | |||||||||
| Total Debt = $68,000 | |||||||||
| Total Equity = $51,000 | |||||||||
| Wally wants to know - | |||||||||
| (a) What is the sustainable growth rate? (4 marks) | |||||||||
| (b) If Oscar & Ollie grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (2 marks) | |||||||||
| (c) What growth rate could be supported with no outside financing at all? (2 marks) |
Expert Answer:
Related Book For 
Financial and Managerial Accounting
ISBN: 978-0132497978
3rd Edition
Authors: Horngren, Harrison, Oliver
Posted Date:
