Table 3.1 in the last chapter presents R&E Supplies’s financial statements for the per...

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.

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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?

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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?

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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)