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473.32 4 Winter 2014

CF. 473.32 4 Winter 2014. ch 4. EFN External Funding Needed IGR Internal Growth Rate SGR Sustainable Growth Rate. External Financing Needed. EFN = increase in total assets – addition to retained earnings. g. g rowth rate in sales. a. total a ssets. p. p rofit margin. s.

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473.32 4 Winter 2014

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  1. CF 473.32 4 Winter 2014

  2. ch 4 • EFN External Funding Needed • IGR Internal Growth Rate • SGR Sustainable Growth Rate

  3. External Financing Needed • EFN = increase in total assets – addition to retained earnings • g • growth rate in sales • a • total assets • p • profit margin • s • previous year’s sales • e • retention ratio

  4. Internal Growth Rate • How fast can we grow on our own? • g • growth rate in sales • a • total assets • p • profit margin • s • previous year’s sales • e • retention ratio • ua • return on assets • i • net income

  5. Sustainable Growth Rate • How fast can we grow if we borrow? • but keep Debt/Equity ratio the same • g • growth rate in sales • a • total assets • p • profit margin • s • previous year’s sales • e • retention ratio • ua • return on assets • i • net income • uq • return on equity • q • total equity • d • total debt

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