LO 343. Sustainable Growth and Outside Financing You’ve collected the following
information about Gandalf, Inc.:
Sales = $295.000
Net income = $18,400
Dividends = $9,100
Total debt = $68,000
Total equity = $94,000
What is the sustainable growth rate for the company? If it does grow at this
rate, how much new borrowing will take place in the coming year, assuming a
constant debt-equity ratio? What growth rate could be supported with no out-
side financing at all?