Question

Based on the following financial data Net income: $5,000,000 Sales: $25,000,000 Assets: $10,000,000 Dividends: $4,000,000 Equity:...

Based on the following financial data Net income: $5,000,000 Sales: $25,000,000 Assets: $10,000,000 Dividends: $4,000,000 Equity: $2,000,000 Liabilities: $8,000,000 What is the SGR?

Homework Answers

Answer #1

SGR is the sustainable growth rate. It can be calculated by the following formula:

SGR = ROE * (1 -d)

where, ROE is the return on equity and d is the dividend payout ratio.

Now, we will calculate the ROE first.

ROE = Net income / Equity

ROE = $5000000 / $2000000 = 2.5

Next, we will calculate the dividend payout ratio.

Dividend payout ratio = Dividend / Net income

Dividend payout ratio = $4000000 / $5000000 = 0.8

Now, putting these values in the SGR formula, we get,

SGR = ROE * (1 -d)

SGR = 2.5 * (1- 0.8)

SGR = 2.5 * 0.2 = 0.5 or 50%

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Barnes Appliances has sales of $10,000,000, net income of 450,000, total assets of $4,000,000, and stockholder's...
Barnes Appliances has sales of $10,000,000, net income of 450,000, total assets of $4,000,000, and stockholder's equity of 2,000,000. What is Barnes Appliance's return on assets?
Consider the following information from Practel Corporation’s consolidated financial statements for 2020: Net income $25,000,000 Net...
Consider the following information from Practel Corporation’s consolidated financial statements for 2020: Net income $25,000,000 Net income attributable to Practel 24,600,000 Depreciation expense 8,000,000 Amortization expense 2,000,000 Loss on sale of plant assets 500,000 Equity method investment income 200,000 Cash dividends received from equity method investment 80,000 Increase in receivables 600,000 Decrease in inventory 900,000 Decrease in current operating liabilities 100,000 Required Use the above data to prepare the operating cash flow section of Practel’s consolidated statement of cash flows...
Income Statement Balance Sheet Sales $20,000,000 Assets: Cost of Goods Sold 8,000,000 Cash $5,000,000 12,000,000 Marketable...
Income Statement Balance Sheet Sales $20,000,000 Assets: Cost of Goods Sold 8,000,000 Cash $5,000,000 12,000,000 Marketable Securities 12,500,000 Selling and Administrative 1,600,000 Accounts Receivable, net 2,500,000 Depreciation 3,000,000 Inventory 30,000,000 EBIT 7,400,000 Prepaid Expenses 5,000,000 Interest 2,000,000 Plant & Equipment 30,000,000 5,400,000 Taxes (40%) 2,160,000 Total Assets 85,000,000 3,240,000 Common Stock Div. 600,000 Liabilities and Equity: $2,640,000 Accounts Payable $20,000,000 Notes Payable 5,000,000 Shares outstanding of common stock = 1,000,000 Accrued Expenses 5,000,000 Market price of common stock = $18...
PLEASE ANSWER THE WHOLE QUESTION Seven metrics The following data were taken from the financial statements...
PLEASE ANSWER THE WHOLE QUESTION Seven metrics The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets. Property, plant, and equipment (net) $ 5,000,000 Liabilities: Current liabilities $ 400,000 Mortgage note payable, 5%, ten-year note issued two years ago 3,600,000 Total liabilities $4,000,000 Stockholders' equity: Preferred $1 stock, $10 par (no change during year) $1,000,000 Common stock, $5 par (no change during year) 2,000,000 Retained...
Seven metrics The following data were taken from the financial statements of Woodwork Enterprises Inc. for...
Seven metrics The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets. Property, plant, and equipment (net) $ 5,000,000 Liabilities: Current liabilities $ 400,000 Mortgage note payable, 5%, ten-year note issued two years ago 3,600,000 Total liabilities $4,000,000 Stockholders' equity: Preferred $1 stock, $10 par (no change during year) $1,000,000 Common stock, $5 par (no change during year) 2,000,000 Retained earnings: Balance, beginning of year...
Income Statement                                        &nbs
Income Statement                                           Balance Sheet Sales $20,000,000   Assets: Cost of Goods Sold 8,000,000 Cash $ 5,000,000 12,000,000 Marketable Securities 12,500,000 Selling and Administrative 1,600,000 Accounts Receivable, net 2,500,000 Depreciation 3,000,000 Inventory 30,000,000 7,400,000 Prepaid Expenses 5,000,000 Interest 2,000,000 Plant & Equipment 30,000,000 5,400,000                 Taxes (40%) 2,160,000   Total Assets 85,000,000 3,240,000                 Common Stock Div. 600,000 Liabilities and Equity: $2,640,000 Accounts Payable $20,000,000 Notes Payable                 5,000,000 Accrued Expenses          5,000,000 Bonds                            25,000,000 Common Stock                5,000,000 Capital in Excess of Par 10,000,000 Retained...
Please calculate the following based on the facts provided:   a. Gross Margin Ratio: Net sales =...
Please calculate the following based on the facts provided:   a. Gross Margin Ratio: Net sales = $1,000,000.00 & Cost of Goods Sold = $200,000.     b. Return on assets ratio (ROA): Net Income = $350,000 & Average Total Assets = $2,500,000   c. Return on Equity (ROE): Net Income = $350,000 & Shareholder's Equity = $5,000,000.   d. Customer Acquisition Cost (CAC): Sales/Marketing Costs = $450,000 & number of new customers 1,000.    e. Current Liquidity Ratio: Current Assets = $1,200,000 & Current Liabilities=...
Young Inc. reported a net operating income of $6,000,000 and average operating assets of $25,000,000 for...
Young Inc. reported a net operating income of $6,000,000 and average operating assets of $25,000,000 for last year. At the beginning of current year, Young has a $10,000,000 investment opportunity that involves sales of $11,000,000, fixed expenses of $3,630,000, and a contribution margin ratio of 40%. If Young takes on this investment opportunity and otherwise performs exactly the same as last year, what is the combined ROI for the entire company? 17.1% 2.2% 19.3% 22.6%
Medtronic firm has $66,000,000 in equity and $60,000,000 in debt and forecast $25,000,000 in net income...
Medtronic firm has $66,000,000 in equity and $60,000,000 in debt and forecast $25,000,000 in net income for the year. It currently pays dividends equal to 14% of its net income. a. What would their internal growth rate be? b. What would their sustainable growth rate be?
Based on​ Jim's expectation of 9.9% sales growth and payout ratio of 89.86% of net income...
Based on​ Jim's expectation of 9.9% sales growth and payout ratio of 89.86% of net income next​ year, Jim developed the pro forma financial statements given below. What is the amount of net new financing needed for​ Jim's Espresso?  Income Statement Balance Sheet       Sales   $222,405 Assets       Costs Except Depreciation   (109,120) Cash and Equivalents   $16,375   EBITDA   $113,285    Accounts Receivable   2,308   Depreciation   (6,616) Inventories   4,484   EBIT   $106,669 Total Current Assets   $23,167   Interest Expense (net)   (429) Property, Plant, and Equipment  ...