The most recent financial statements for Benatar Co.are shown here: Assets and costs are proportional to sales.Debt and equity are not.The company maintains a constant 40 percent dividend payout ratio.No external equity financing is possible.What is the internal growth rate?

Question

The most recent financial statements for Benatar Co.are shown here:  Assets and costs are proportional to sales.Debt and equity are not.The company maintains a constant 40 percent dividend payout ratio.No external equity financing is possible.What is the internal growth rate?

Quizplus · Accepted Answer

Internal growth rate = [($2,665.26/$42,883) × (1 - 0.40)]/{1 - [($2,665.26/$42,883) × (1 - 0.40)]} = 3.87 percent

The Most Recent Financial Statements for Benatar Co