Question: Define the following: S = Previous years sales A = Total assets E = Total equity g = Projected growth in sales PM = Profit

Define the following:
S = Previous year’s sales
A = Total assets
E = Total equity
g = Projected growth in sales
PM = Profit margin
b = Retention (plowback) ratio
Assuming all debt is constant, show that EFN can be written as follows:
EFN = -PM(S) b + (A - PM(S) b ) * g

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