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) F1F1F1S1F1F1F10 (1 - 0.40)]/{1 - [($2,665.26/$42,883) F1F1F1S1F1F1F10 (1 - 0.40)]} = 3.87 percent

The Most Recent Financial Statements for Benatar Co