Question

Suppose that GG Co. would like to grow its sales by 30 percent, which is greater than its sustainable growth rate (see Practice Problem 40). If all the other financial information remains unchanged, how much external financing will the company require?
For GG. Co., calculate the degree of total leverage (DTL) and break-even point of sales at which the firm covers all its operating and fixed costs, given the following information: sales are $5,050,000; variable cost is $1,850,000; net income is $685,750; tax rate (T) is 35 percent; and fixed cost is $2,100,000.



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  • CreatedFebruary 25, 2015
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