What is their sustainable growth rate

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A firm has Current Assets of $500, Fixed Assets of $2000, and Current Liabilities of $200 (all of these are part of operations). They also have Long Term Debt of $1500 and Equity of $800. Their Sales are $3000, COGS is $2100, Depreciation is $400, Interest Expense is $150, and Taxes are $105 (The Tax Rate is 30%) resulting in Net Income of $245. They paid out $200 in Dividends and have 500 shares outstanding at a price of $10 per share.

1. What is the companies Return on Net Operating Assets (Use these amounts as average amounts)?

a) 15%                b) 20%                c) 25%                 d) 30%

2. What is their Price Earnings Ratio?

a) 15                   b) 20                    c) 25                    d) 30

3. What is their Sustainable Growth Rate?

a) 3.7%               b) 4.5%               c) 5.6%                d) 6.9%

Reference no: EM131555034

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