Question: EFN Define the following: S = Previous years sales A = Total assets D = Total debt E = Total equity g = Projected growth

EFN Define the following:

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

Show that EFN can be written as follows:

EFN = – PM(S)b + (A – PM(S)b) X g

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