Question

**Sustainable Growth Rate** You have located the
following information on Rock Company: debt ratio = 44.5%, capital
intensity ratio = 2.43 times, profit margin = 17%, and dividend
payout ratio = 34%. What is the sustainable growth rate for Rock?
(Do not round intermediate steps.)

Answer #1

debt ratio=debt/total assets

Hence debt=0.445total assets

Total assets=debt+equity

Hence equity=(1-0.445)total assets=0.555total assets

capital intensity ratio=total assets/sales

Hence total assets=2.43sales

Profit margin=Net income/Sales

Hence net income=0.17sales

ROE=net income/total equity

=0.17sales/0.555total assets

=0.17sales/(0.555*2.43sales)

=0.126051977

Retention ratio=1-payout

=(1-0.34)=0.66

SGR=(ROE*Retention ratio)/[1-(ROE*Retention ratio)]

=(0.126051977*0.66)/[1-(0.126051977*0.66)]

which is equal to

=**9.07%(Approx).**

A firm wants a sustainable growth rate of 3.48 percent while
maintaining a dividend payout ratio of 34 percent and a profit
margin of 8 percent. The firm has a capital intensity ratio of 2.
What is the debt–equity ratio that is required to achieve the
firm's desired rate of growth?
a. .64 times
b. .73 times
c. .66 times
d. .22 times
e. .27 times
If there are any shortcuts on a financial calculator, that would
be helpful. I...

A firm wants a sustainable growth rate of 2.83 percent while
mainaining a dividend payout ratio of 21 percent and a profit
margin of 5 percent. the firm has a capital intensity ratio of 2.
what is the debt equity ratio that is required to achieve the firms
desired rate of growth?

A firm wants a sustainable growth rate of 3.73 percent while
maintaining a dividend payout ratio of 39 percent and a profit
margin of 8 percent. The firm has a capital intensity ratio of 2.
What is the debt–equity ratio that is required to achieve the
firm's desired rate of growth?

Fulkerson Manufacturing wishes to maintain a sustainable growth
rate of 10 percent a year, a debt–equity ratio of .37, and a
dividend payout ratio of 34 percent. The ratio of total assets to
sales is constant at 1.38.
What profit margin must the firm achieve in order to meet its
growth rate goal? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Profit margin
%

A firm wants a sustainable growth rate of 2.55% while
maintaining a 35.00% dividend payout ratio and a profit margin of
4.00%. The firm has a capital intensity ratio of 2. What is the
debt-equity ratio that is required to achieve the firm's desired
ratio of growth?
A) 0.09
B) 0.23
C) 0.96
D) 0.91

NewCorp wants a sustainable growth rate of 2.69% while
maintaining a 40.00% dividend payout ratio and a profit margin of 5
percent. The company has a capital intensity ratio of 1.5. What
equity multiplier (EM) is required to achieve the company's desired
rate of growth?
A.
1.31
B.
1.91
C.
1.24
D.
1.95

A firm wants a sustainable growth rate of 3.33 percent while
maintaining a 31 percent dividend payout ratio and a profit margin
of 5 percent. The firm has a capital intensity ratio of 2. What is
the debt-equity ratio that is required to achieve the firm's
desired rate of growth?

Fulkerson Manufacturing wishes to maintain a sustainable growth
rate of 8.5 percent a year, a debt–equity ratio of .53, and a
dividend payout ratio of 26 percent. The ratio of total assets to
sales is constant at 1.22.
What profit margin must the firm achieve in order to meet its
growth rate goal? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Profit margin
%

Fulkerson Manufacturing wishes to maintain a sustainable growth
rate of 8.5 percent a year, a debt–equity ratio of .53, and a
dividend payout ratio of 26 percent. The ratio of total assets to
sales is constant at 1.22.
What profit margin must the firm achieve in order to meet its
growth rate goal? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Profit margin
%

Consider the following
information for Kaleb's Kickboxing:
Profit margin
8%
Capital intensity
ratio
0.59
Debt–equity
ratio
0.59
Net income
$23,000
Dividends
$15,640
Required:
Calculate the sustainable growth
rate? (Do not round your intermediate
calculations.)

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