Question: You've collected the following information about Erna, Inc.:
|
|
|
|
|
| Sales |
= |
$ |
260,000 |
|
| Net income |
= |
$ |
17,300 |
|
| Dividends |
= |
$ |
6,100 |
|
| Total debt |
= |
$ |
56,000 |
|
| Total equity |
= |
$ |
87,000 |
|
|
What is the sustainable growth rate for the company?
Assuming it grows 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?