Question

You are given the following information for Clapton Guitars, Inc.

Profit margin 10% Total asset turnover 1.4 Total debt ratio 0.49 Payout ratio 36%

Calculate the sustainable growth rate (in %). (round 4 decimal places)

Answer #1

Equity Ratio = 1 - Debt Ratio

Equity Ratio = 1 - 0.49

Equity Ratio = 0.51

Return on Equity, ROE = Profit Margin * Total Asset Turnover *
(1 / Equity Ratio)

Return on Equity, ROE = 10.00% * 1.40 * (1 / 0.51)

Return on Equity, ROE = 27.4510%

Retention Ratio, b = 1 - Payout Ratio

Retention Ratio, b = 1 - 0.36

Retention Ratio, b = 0.64

Sustainable Growth Rate = [ROE * b] / [1 - ROE * b]

Sustainable Growth Rate = [0.274510 * 0.64] / [1 - 0.274510 *
0.64]

Sustainable Growth Rate = 0.175686 / 0.824314

Sustainable Growth Rate = 0.213130 or 21.3130%

You are given the following information for Clapton Guitars,
Inc.
Profit margin
9%
Total asset turnover
1.3
Total debt ratio
0.3
Payout ratio
37%
Calculate the sustainable growth rate (in %) (round 4 decimal
places)

You are given the following information for Clapton Guitars,
Inc.
Profit margin
9
%
Total asset turnover
1.6
Total debt ratio
0.42
Payout ratio
35
%
Calculate the sustainable growth rate (in %).
(Enter your answer as a percentage, omit the "%" sign in
your response, and round your answer to 4 decimal places. For
example, 1.23456% should be entered as 1.2346)

You are given the following information for Hendrix Guitars,
Inc.
Profit margin
6.7
%
Total asset
turnover
1.7
Total debt
ratio
.48
Payout ratio
25
%
Calculate the sustainable growth rate. (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)

You’ve collected the following information about Sully,
Inc.:
Profit margin
=
4.43
%
Total asset turnover
=
3.40
Total debt ratio
=
.26
Payout ratio
=
28
%
What is the sustainable growth rate for the company? (Do
not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
Sustainable growth rate
%
What is the ROA? (Do not round intermediate calculations
and enter your answer as a percent rounded to...

Assume the following ratios are constant. Total asset turnover =
2.30 Profit margin = 5.8 % Equity multiplier = 1.77 Payout ratio =
35 % What is the sustainable growth rate? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.) Sustainable growth
rate

Assume the following ratios are constant.
Total asset turnover
=
2.23
Profit margin
=
5.1
%
Equity multiplier
=
1.70
Payout ratio
=
48
%
What is the sustainable growth rate? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
Sustainable growth rate ________ %

Assume the following ratios are constant:
Total asset turnover
2.50
Profit margin
5.4
%
Equity multiplier
1.30
Payout ratio
35
%
What is the sustainable growth rate? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)

Assume the following ratios are constant. Total asset turnover =
2.24 Profit margin = 5.2 % Equity multiplier = 1.71 Payout ratio =
49 % What is the sustainable growth rate?

Assume the following ratios are constant: Total asset turnover 2
Profit margin 5.1 % Equity multiplier 1.2 Payout ratio 25 % What is
the sustainable growth rate?

Assume the following ratios are constant.
Total asset turnover 1.43
Profit margin 9.1%
Equity multiplier 1.8
Payout ratio 67%
What is the sustainable growth rate?

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