4) Subsidiary sustainable growth rate ( Wally is pleased with your work. He asks you for help on one more project - and then you can take a well-deserved break! He gives you this information that he has collected on one of TimCo's key subsidiaries, Oscar & Ollie Inc.: • Sales= $165,000 Net Income $14,800 • Dividends = $9,300 Total Debt = $68,000 Total Equity=$51,000 Wally wants to know- (a) What is the sustainable growth rate? (b) If Oscar & Ollie grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (c) What growth rate could be supported with no outside financing at all? |
4) Subsidiary sustainable growth rate ( Wally is pleased with your work. He asks you for help on one more project - and then you can take a well-deserved break! He gives you this information that he has collected on one of TimCo's key subsidiaries, Oscar & Ollie Inc.: • Sales= $165,000 Net Income $14,800 • Dividends = $9,300 Total Debt = $68,000 Total Equity=$51,000 Wally wants to know- (a) What is the sustainable growth rate? (b) If Oscar & Ollie grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (c) What growth rate could be supported with no outside financing at all? |
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4) Subsidiary sustainable growth rate (
Wally is pleased with your work. He asks you for help on one more project-and then you
can take a well-deserved break! He gives you this information that he has collected on one
of TimCo's key subsidiaries, Oscar & Ollie Inc.:
Sales = $165,000
Net Income = $14,800
Dividends = $9,300
Total Debt = $68,000
%3D
Total Equity = $51,000
%3D
Wally wants to know-
(a) What is the sustainable growth rate?
(b) If Oscar & Ollie grows at this rate, how much new borrowing will take place in the coming
year, assuming a constant debt-equity ratio?
(c) What growth rate could be supported with no outside financing at all?|
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