Table 3.1 in the last chapter presents R&E Supplies’s financial statements for the period 2008 through 2011, and Table 3.5 presents a pro forma financial forecast for 2012. Use the information in these tables to answer the following questions.
a. Calculate R&E Supplies’s sustainable growth rate in each year from 2009 through 2012.
b. Comparing the company’s sustainable growth rate with its actual and projected growth rates in sales over these years, what growth management problems does R&E Supplies appear to face in this period?
c. How did the company cope with these problems? Do you see any difficulties with the way it addressed its growth problems over this period? If so, what are they?
d. What advice would you offer management regarding managing future growth?
TABLE 3.1
Financial Statements for R&E Supplies, Inc., December 31, 2008–2011 ($ thousands)
TABLE 3.5
Forecasting with a Computer Spreadsheet: Pro Forma Financial Forecast for R&E Supplies, Inc., December 31, 2012 ($ thousands)
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