Sustainable Growth and Outside Financing Youve collected the following information about Bad Company, Inc.: Sales = $170,000
Question:
Sustainable Growth and Outside Financing You’ve collected the following information about Bad Company, Inc.:
Sales = $170,000
Net income = $16,000
Dividends = $11,500
Total debt = $120,000
Total equity = $44.000
What is the sustainable growth rate for Bad Company, Inc.? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt—equity ratio? What growth rate could be supported with no outside financing at all?
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Step by Step Answer:
To calculate the sustainable growth rate we first must calculate the retention ratio and ROE The ret...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
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