## Info

Capacity Usage and Growth In the previous problem, suppose the firm was operating at only 80 percent capacity in 2002. What is EFN now? Calculating EFN In Problem 23, suppose the firm wishes to keep its debt-equity ratio constant. What is EFN now?

EFN and Internal Growth Redo Problem 23 using sales growth rates of 25 and 30 percent in addition to 20 percent. Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine the relationship between them. At what growth rate is the EFN equal to zero? Why is this internal growth rate different from that found by using the equation in the text? EFN and Sustainable Growth Redo Problem 25 using sales growth rates of 30 and 35 percent in addition to 20 percent. Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine the relationship between them. At what growth rate is the EFN equal to zero? Why is this sustainable growth rate different from that found by using the equation in the text? Constraints on Growth Lander's Recording, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .40. Profit margin is 4.5 percent, and the ratio of total assets to sales is constant at 1.75. Is this growth rate possible? To answer, determine what the dividend payout ratio must be. How do you interpret the result? EFN Define the following:

S = Previous year's sales A = Total assets D = Total debt E = Total equity g = Projected growth in sales PM = Profit margin b = Retention (plowback) ratio

Show that EFN can be written as:

0 0