In the Year Just Ended,Ellie May's Power Tools Had Net

question 15

Multiple Choice

In the year just ended,Ellie May's Power Tools had net income of $200,000 based upon a sales level of $1,500,000.It's total assets are $800,000 while its total equity is $700,000.If Ellie May pays out 0% of its net income in dividends,then what is the firm's sustainable growth rate going forward?

• A) .40%
• B) 38%
• C) 40%
• D) none of the above

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Definitions:

Marginal Revenue

The gain in income from selling an additional unit of a product or service.

Marginal Cost

The cost implications of producing an additional unit of either a product or service.

Total Revenue

The total amount of money generated by a business from the sale of goods or services before any expenses are subtracted.

Marginal Revenue

The increased earnings from the sale of one extra unit of a good or service.