Anderson Inc
Subject:FinancePrice: Bought3
Anderson Inc. is in a fast growing industry, but the company's growth rate is far below that of the industry. Selected financial information for Anderson and the industry is as follows ($000):
Industry: Growth rate: 20.5% Dividend payout: 10% Return on Sales: 4% Total Asset Turnover: 1.9x Debt:Equity: 2.0X
Anderson: Growth rate: 3.75% Dividend payout: 30% Return on Sales: 5% Total Asset Turnover; 2.0x Debt:Equity: 0.25x
Required:
a) Use a sustainable growth rate analysis to determine the source(s) of Anderson's growth problems.
b) Identify 2 ways that Anderson can improve its growth and the possible disadvantages of making these changes.
