Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 850 Costs 160 Interest Taxes 40 110 Net income $ 540 BALANCE SHEET, YEAR-END 2018 Assets $ 3,000 2019 $ 3,300 Total $ 3,000 $ 3,300 Debt Equity Total 2018 $ 1,000 2,000 2019 $ 1,100 2,200 $ 3,000 $ 3,300 a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 70% and the equity-to-asset ratio is fixed at 2/3? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the sustainable growth rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 850 Costs 160 Interest Taxes 40 110 Net income $ 540 BALANCE SHEET, YEAR-END 2018 Assets $ 3,000 2019 $ 3,300 Total $ 3,000 $ 3,300 Debt Equity Total 2018 $ 1,000 2,000 2019 $ 1,100 2,200 $ 3,000 $ 3,300 a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 70% and the equity-to-asset ratio is fixed at 2/3? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the sustainable growth rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 4RE: Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020....

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