Financial Planning. Financial Planning Models Begin With Sales, but Where do Sales Come From?. Economy. Industry. Product. Sales. Changes in Sales Necessitate Changes in Assets and in Liabilities and Owners’ Equity. Sales. Assets. Liabilities. Owners’ Equity.
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CA = Current Assets
FA = Fixed Assets
SL = Spontaneous Liabilities
S = Original Sales
g = growth rate in sales
= net profit margin
d = dividend payout ratio
Suppose EFN = 0, what is the growth rate?
= .0995/[1-.1595-.0995] = .1343 = 13.43%
Suppose no external funding of any kind is used. What is the growth rate?
Suppose no external equity is used, but enough debt is used to maintain the same total debt-to-total asset ratio. What growth can be sustained?