ADP, Inc., is a manufacturer ofspecialty circuit boards in the personal computer industry. The firm hasexperienced phenomenal sales growth over its short five-year life. Selectedfinancial statement data are found in the following table: 2003 2002 2001 2000 1999 Sales Net income Assets Dividends Common equity Liabilities Liabilities and equity $3,000 150 2,700 60 812 1,888 2,700
$2,200 110 1,980 44 722 1,258 1,980 $1,800 90 1,620 36 656 964 1,620 $1,400 70 1,260 28 602 658 1,260 $1,200 60 1,080 24 560 520 1,080
Calculate ADP’s sustainable rate of growth for each of the five years of its existence. Compare the actual rates of growth in sales to the firm’s sustainable rates calculated in part a. How has ADP been financing its growing asset needs?