What is the maximum growth rate eirre company

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Maximum growth rate

Problem 1: Eirre Company has the following ratios: A*/S = 1.6; L*/S = 0.4; profit margin = 0.10; and dividend payout ratio = 0.45, or 45 percent. Sales last year were P100 million. Assuming that these ratios will remain constant and that all liabilities increase spontaneously with increases in sales, what is the maximum growth rate Eirre Company can achieve without having to employ nonspontaneous external funds?

A. 3.9 percent

B. 4.8 percent

C. 7.8 percent

D. 9.6 percent

Reference no: EM132698222

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