Question

Using the definitions below, show that EFN can be written as
EFN = – PM(S)b + [A – PM(S )b] × g
Asset needs will equal A × g. The addition to retained earnings will equal PM(S)b × (1 + g).
S = Previous year’s sales
A = Total assets
D = Total debt
E = Total equity
g = Projected growth in sales
PM = Profit margin
b = Retention (plowback) ratio


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  • CreatedJune 17, 2015
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