Complete the following:
Using the company's financial statements, calculate and evaluate the firm's sustainable growth rate (SGR) for the last 3 years, and summarize your findings in your paper. Be sure to address the following:
• What are the sustainable growth rates for your subject company over the period that you studied?
• What are the consequences faced by firms that grow at a rate that is not consistent with their sustainable rate?
• If the firm grew at a rate above or below the SGR, how might it finance its excessive growth or reward its stockholders for the underperformance?
Instructions:
A minimum of 800 words is required to adequately address all the requirements in this IP! (This doesn't include title and reference information)
-You are calculating your firms Sustainable Growth Rates for the last 3 years and providing a discussion regarding these findings. You need to compare the firm's SGR with it's Actual Growth Rate in order to determine if your firm grew at a rate above or below the what was sustainable; so, calculate and compare these rates!
-Calculate the Sustainable Growth Rates for the THREE YEARS. Be sure to include the data you use in your calculations! Show ALL your calculations for the Sustainable Growth rates! This include your calculations for Return on Equity and Dividend Payout ratios.
-Explain the consequences faced by the firm if it grew at a rate that is higher than what is sustainable (this is when the Actual Growth rate exceeds the Sustainable Growth Rate)
-Explain the consequences faced by the firm if it grew at a rate that is lower that the SGR
-If your firm grew at a rate above or below the SGR, how did it finance its excessive growth (did it borrow more money? Did debt increase? Did it sell more equity? Check the Balance Sheet!) or reward its stockholders for the underperformance (did they increase dividends?)
-You need to compare the firm's SGR with its Actual Growth Rate in order to determine if your firm grew at a rate above or below the what was sustainable; so calculate and compare these rates!
Ensure that the narrative you provide, the discussion supporting your answers, is worthy of earning full points for each requirement! If you answer the question "what are some of the consequence of growing too fast" with "the firm will suffer from a liquidity crisis;" you will be awarded some points because this is correct, however, you will not earn full points; you need to ensure you provide comprehensive depth and detail addressing each requirement and demonstrate an understanding of the concepts instead of simply regurgitating material from the textbook or chats.
Instructor's Comments:
Do not simply regurgitate this information in assignments! You must discuss these concepts in order to demonstrate your understanding of them! You won't get credit for this information unless you show you understand it!
Please exceed these minimums; the more the better; this is how you earn a "" or an "A"!
Be sure to properly reference your work providing intext citations on all data and information that is not common knowledge. References and citations must be properly APA formatted!