Problem 1 - GBK, Inc. has sales of 10,552; total assets of 6210; and a debt-equity ratio of 1.40. If its return on equity is 15%, what is its net income? (You may, or may not, find the Du Pont Identity helpful.)
Problem 2 - You have collected the following information about Your Firm, Inc.:
Sales = 215,000
Net Income = 19,200
Dividends = 10,200
Total Debt = 96,000
Total Equity = 64,000
A] What is the sustainable growth rate for Your Firm, Inc.?
B] If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio?
C] What growth rate could be supported with no outside financing at all?