Calculating Internal Growth
The most recent financial statements for Barely Heroes Co. are shown here:
|
Income Statement |
Balance Sheet |
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|
Sales |
$6,475 |
Current assets |
$ 9,000 |
Debt |
$22,000 |
|
Costs |
3,981 |
Fixed assets |
25,000 |
Equity |
12,000 |
|
Taxable income |
$2,494 |
Total |
$34,000 |
Total |
$34,000 |
|
Taxes (34%) |
848 |
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|
Net income |
$1,646 |
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Assets and costs are proportional to sales. Debt and equity are not. Barely Heroes maintains a constant 20 percent dividend payout ratio. No external equity financing is possible. What is the internal growth rate?