ASSTGNMENT— FINANGrAL POLtcy 2 cokPoRire sTeATecy Question 4 The following information is related to $ Ltd: Net Profit Ratio = 5% Retention Ratio = 70% ‘Asset Tumover Ratio = 1 Asset to Equity = 2.4 What rate of Growth can be sustained without resorting fo external equity issue. Question 2 Following Financial data are available for POR Ltd. for the year 2008: (in takh) 8% debentures 125 10% bonds (2007) 50 Equity shares (® 10 each) 100 Reseeves and Surplus 300 Total Assots 600 ‘Assets Tumovers ratio 14 Effective interest rate 8% Effective tax rate 40% Operating margin 10% Dividend payout ratio 16.67% Current market Price of Share 4 | Required rate of return of investors 15% You are required fo: () Draw Income Statement for the year. (il) Caloulate its Internal Growth Rate of Earnings. (i) Caloulate its Sustainable Growth Rate of Eamings.