• Systematic and Unsystematic Risk: Explain the differences between systematic and unsystematic risk.
• Financial Risks: Describe the potential impacts of the following types of financial risk on the company featured in the case study:
  • Interest rate risk
  • Economic risk
  • Credit risk
  • Operational risk
• Lower Growth Impact: Explain the impact a lower growth in sales could have on the dividend policy and retained earnings for the company featured in the case study.
• Higher Growth Impact: Explain the impact a higher growth in sales could have on the dividend policy and retained earnings for the company featured in the case study.

Table A Company Financials Assuming a 25% Increase in Sales ($ in millions) 2009 2010 Assets Cash Accounts receivable Inventories Plant & equipment Total $ 12 240 200 400 25% 25% 25% 1 25% $ 15 300 250 500 $1,065 $852 Liabilities and Equity Accounts payable Accrued expenses Long-term debt Owners' equity Total External financing need Total $100 80 272 400 $852 O $852 25% 25% Unchanged footnotea $ 125 100 272 442 $ 939 126 $1,065 It is assumed (1) that the firm earns $60 million (a 15% return on beginning of year equity) and pays out $18 million as a cash dividend; and (2) that there is no required debt repayment in 2010