Question

Fried donuts has sales of $764,900, total assets of $687,300, total equity of $401,300, net income of $68,200, and dividends paid of $27,000. what is the internal growth rate?

Answer 1

Internal growth rate = Net income / Total Assets
Net income = $68,200 
Total assets = $687,300
Internal growth rate 
= $68,200 / $687,300
= 0.099228 x 100%
= 9.92 %
Fried Donuts has an internal growth rate of 9.92%.