Problem 4-6 Calculating Internal Growth [LO3] The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet   Sales $ 16,300 Current assets $ 10,900 Debt $ 15,400   Costs 11,700 Fixed assets 26,250 Equity 21,750   Taxable income $ 4,600     Total $ 37,150     Total $ 37,150   Taxes (40%) 1,840     Net income $ 2,760 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 20 percent dividend payout ratio. No external financing is possible. What is the internal growth rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))   Internal growth rate  %   2. Problem 4-7 Calculating Sustainable Growth [LO3] The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet   Sales $ 16,200 Current assets $ 10,600 Debt $ 15,100   Costs 12,400 Fixed assets 25,500 Equity 21,000   Taxable income $ 3,800     Total $ 36,100     Total $ 36,100   Taxes (40%) 1,520     Net income $ 2,280 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 25 percent dividend payout ratio. No external equity financing is possible. What is the sustainable growth rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))   Sustainable growth rate  %   3. Problem 4-8 Sales and Growth [LO2] The most recent financial statements for Mc Govney Co. are shown here: Income Statement Balance Sheet   Sales $ 52,600 Current assets $ 23,200 Long-term debt $ 54,000   Costs 42,300 Fixed assets 93,000 Equity 62,200   Taxable income $ 10,300   Total $ 116,200   Total $ 116,200   Taxes (34%) 3,502     Net income $ 6,798 Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt–equity ratio. What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))   Maximum increase in sales $    4. Problem 4-16 Full-Capacity Sales [LO1] Alter Bridge Mfg., Inc., is currently operating at only 78 percent of fixed asset capacity. Current sales are $840,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))   Maximum sales growth  %   5. Problem 4-17 Fixed Assets and Capacity Usage [LO1] Alter Bridge Mfg., Inc., is currently operating at only 88 percent of fixed asset capacity. Current sales are $760,000. Fixed assets are $460,000 and sales are projected .

1. Problem 4-6 Calculating Internal Growth [LO3]
The most recent financial statements for Live Co. are shown
here:
Income Statement
Balance Sheet
Sales
$
16,300
Current assets
$
10,900
Debt
$
15,400
Costs
11,700
Fixed assets
26,250
Equity
21,750

2. Taxable income
$
4,600
Total
$
37,150
Total
$
37,150

3. Taxes (40%)
1,840
Net income
$
2,760

4. Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 20 percent dividend
payout ratio. No external financing is possible.
What is the internal growth rate? (Do not round intermediate
calculations and round your final answer to 2 decimal places.
(e.g., 32.16))
Internal growth rate
%
2. Problem 4-7 Calculating Sustainable Growth [LO3]
The most recent financial statements for Live Co. are shown
here:
Income Statement
Balance Sheet

5. Sales
$
16,200
Current assets
$
10,600
Debt
$
15,100
Costs
12,400
Fixed assets
25,500
Equity
21,000

6. Taxable income
$
3,800
Total
$
36,100
Total
$
36,100
Taxes (40%)
1,520

7. Net income
$
2,280

8. Assets and costs are proportional to sales. Debt and equity are
not. The company maintains a constant 25 percent dividend
payout ratio. No external equity financing is possible.
What is the sustainable growth rate? (Do not round intermediate
calculations and round your final answer to 2 decimal places.
(e.g., 32.16))
Sustainable growth rate
%
3. Problem 4-8 Sales and Growth [LO2]
The most recent financial statements for Mc Govney Co. are
shown here:
Income Statement
Balance Sheet
Sales
$
52,600
Current assets
$
23,200

9. Long-term debt
$
54,000
Costs
42,300
Fixed assets
93,000
Equity
62,200
Taxable income
$
10,300
Total
$
116,200

10. Total
$
116,200
Taxes (34%)
3,502

11. Net income
$
6,798

12. Assets and costs are proportional to sales. The company
maintains a constant 40 percent dividend payout ratio and a
constant debt–equity ratio.
What is the maximum increase in sales that can be sustained
assuming no new equity is issued? (Do not round intermediate
calculations and round your final answer to 2 decimal places.
(e.g., 32.16))
Maximum increase in sales
$
4. Problem 4-16 Full-Capacity Sales [LO1]
Alter Bridge Mfg., Inc., is currently operating at only 78
percent of fixed asset capacity. Current sales are $840,000. How
fast can sales grow before any new fixed assets are needed? (Do
not round intermediate calculations and round your final answer
to 2 decimal places. (e.g., 32.16))
Maximum sales growth
%
5. Problem 4-17 Fixed Assets and Capacity Usage [LO1]
Alter Bridge Mfg., Inc., is currently operating at only 88
percent of fixed asset capacity. Current sales are $760,000.
Fixed assets are $460,000 and sales are projected to grow to
$870,000. How much in new fixed assets are required to support
this growth in sales? Assume the company maintains its current
operating capacity. (Do not round intermediate calculations and
round your final answer to 2 decimal places. (e.g., 32.16))
New fixed assets
$
6. Problem 4-24 Calculating EFN [LO2]
The most recent financial statements for Fleury Inc., follow.

13. Sales for 2012 are projected to grow by 25 percent. Interest
expense will remain constant; the tax rate and the dividend
payout rate will also remain constant. Costs, other expenses,
current assets, fixed assets and accounts payable increase
spontaneously with sales.
FLEURY, INC.
2011 Income Statement
Sales
$
750,000
Costs
585,000
Other expenses
21,000

14. Earnings before interest and taxes
$
144,000
Interest paid
17,000
Taxable income
$
127,000
Taxes (20%)
25,400

15. Net income
101,600
Dividends
$
20,320
Addition to retained earnings
81,280

16. FLEURY, INC.
Balance Sheet as of December 31, 2011
Assets
Liabilities and Owners’ Equity
Current assets
Current liabilities
Cash
$
20,940
Accounts payable
$
55,100
Accounts receivable
33,260
Notes payable
14,300

17. Inventory
70,220
Total
$
69,400
Total
$
124,420
Long-term debt
$
133,000
Fixed assets
Owners’ equity

18. Net plant and equipment
$
360,000
Common stock and paid-in surplus
$
119,000
Retained earnings
163,020
Total
$
282,020

19. Total assets
$
484,420
Total liabilities and owners’ equity
$
484,420
If the firm is operating at full capacity and no new debt or
equity is issued, what external financing is needed to support
the 25 percent growth rate in sales? (Do not round intermediate
calculations.)
EFN
$