Question

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?

Answer #1

1] | Per DuPont, ROE = [Net income/Sales]*[Sales/Total Assets]*[Total assets/Equity] | |

That is, ROE = Profit margin*Asset turnover*Equity Multiplier | ||

Thus ROE = 2*5.1%*1.2 = | 12.24% | |

2] | SGR = ROE*b [where ROE is calculated using beginning equity], where b = | |

retention rate. Retention ratio = 1/25% = 75% | ||

So, SGR = 0.1224*0.75 = | 9.18% | |

If current equity is used for calculating ROE, | ||

SGR = ROE*b/(1-ROE*b) | ||

So, SGR = 0.1224*0.75/(1-0.1224*0.75) = | 10.11% |

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 1.43
Profit margin 9.1%
Equity multiplier 1.8
Payout ratio 67%
What is the 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 =
2.30 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

Loreto Inc. has the following financial ratios: asset turnover =
2.60; net profit margin (i.e., net income/sales) = 4%; payout ratio
= 25%; equity/assets = 0.30.
a. What is Loreto's sustainable growth
rate?
b. What is its internal growth rate?

Loreto Inc. has the following financial ratios: asset turnover =
1.60; net profit margin (i.e., net income/sales) = 6%; payout ratio
= 25%; equity/assets = 0.80.
a. What is Loreto's sustainable growth
rate?
b. What is its internal growth rate?

Company A has the following financial data. Assume that the
financial ratios of the company are constant.
Payout ratio 40%, Total asset $120 million, Total equity $100
million, Profit margin 8%, Total asset turnover 1.4
What is the sustainable growth rate of this company?

you are given the following information for Hendrix Guitars,
Inc. Profit margin 6.5% total Asset turnover 1.5 Total debt ratio
.46 Payout ratio 30% calculate the sustainable growth rate.

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)

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