Table 3.1 in the last chapter presents R&E Supplies financial statements for the period 2014 through 2017,

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Table 3.1 in the last chapter presents R&E Supplies’ financial statements for the period 2014 through 2017, and Table 3.5 presents a pro forma financial forecast for 2018. Use the information in these tables to answer the following questions.

a. Calculate R&E’s sustainable growth rate in each year from 2015 through 2018.

b. Comparing the company’s sustainable growth rate with its actual and projected growth rates in sales over these years, what growth management problems does R&E appear to face in this period?

c. How did the company cope with these problems? Do you see any difficulties with the way it addressed its growth problems over this period? If so, what are they?

d. What advice would you offer management regarding managing future growth?

Table 3.1

Income Statements 2014 2015 2016 2017* Net sales $11,190 9,400 $13,764 11,699 $16,104 $20,613 17,727 Cost of goods sold

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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