Introduction to Corporate Finance

Ross et al.: Fundamentals

of Corporate Finance, Sixth

Edition, Alternate Edition

II. Financial Statements

and Long−Term Financial

Planning

4. Long−Term Financial
   Planning and Growth

© The McGraw−Hill^157

Companies, 2002

the internal growth rate and sustainable growth rate over the past two years. Are

the growth rates the same for each company for the two years? Why or why not?

4.1 Growth Rates Go to quote.yahoo.comand enter the ticker symbol “IP” for In-

ternational Paper. When you get the quote, follow the “Research” link. What is

the projected sales growth for International Paper for next year? What is the pro-

jected earnings growth rate for next year? For the next five years? How do these

earnings growth projections compare to the industry, sector, and S&P 500 index?

4.2 Applying Percentage of Sales Locate the most recent annual financial state-

ments for Du Pont at http://www.dupont.comunder the “Investor Center” link. Locate

the annual report. Using the growth in sales for the most recent year as the pro-

jected sales growth for next year, construct a pro forma income statement and

balance sheet.

4.3 Growth Rates You can find the home page for Caterpillar, Inc., at http://www.

caterpillar.com. Go to the web page, select “Cat Stock,” and find the most recent

annual report. Using the information from the financial statements, what is the

internal growth rate for Caterpillar? What is the sustainable growth rate?

Spreadsheet Templates4–5, 4–6, 4–21, 4–23, 4–26, 4–27

126 PART TWO Financial Statements and Long-Term Financial Planning

What’s On

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