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Compute what is the sustainable growth rate

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Reference no: EM132634843

Intro - Your company's most recent income statement and balance sheet are given below:

Income statement ($ million)          Balance sheet ($ million)

Sales 15                         Current assets 12.6              Debt 18.9

Costs 12                       Fixed assets 50.4                   Equity 44.1

Net income 3                 Total assets 63                        Total 63

Sales, assets and costs are expected to grow by the same rate next year. The company is expected to pay NO dividends next year.

Question 1: What is the internal growth rate?

Question 2: What is the sustainable growth rate?

Reference no: EM132634843

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