Question

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
%

Answer #1

Retention ratio=1-dividend payout ratio

=1-0.26

=0.74

sustainable growth rate =(ROE*Retention ratio)/[1-(ROE*Retention ratio)]

0.085=(ROE*0.74)/[1-(ROE*0.74)]

0.085[(1-(ROE*0.74)]=0.74ROE

0.085-0.0629ROE=0.74ROE

ROE=0.085/(0.74+0.0629)

=0.105866234

Debt-equity ratio=debt/equity

Hence debt=0.53equity

Let equity be $x

Hence debt=$0.53x

Total asset=debt+equity

=$1.53x

Equity multiplier=Total assets/equity

=1.53x/x

=1.53

ROE=Profit margin*Total asset turnover*Equity multiplier

0.105866234=Profit margin*(1/1.22)*1.53

Profit margin=(0.105866234*1.22)/1.53

which is equal to

=**8.44%(Approx).**

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 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
%

Sig, Inc., wishes to maintain a growth rate of 13 percent per
year and a debt-equity ratio of .3. The profit margin is 7 percent,
and the ratio of total assets to sales is constant at 1.67.
What dividend payout ratio is necessary to achieve this growth
rate under these constraints? (A negative answer should be
indicated by a minus sign. Do not round intermediate calculations
and enter your answer as a percent rounded to the nearest whole
number, e.g.,...

Suprenuk, Inc., wishes
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assets to sales is constant at 1.69.
What dividend payout
ratio is necessary to achieve this growth rate under these
constraints? (A negative answer should be indicated by a
minus sign. Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g.,
32.16.)...

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percent and the ratio of total assets to sales is constant at
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What dividend payout ratio is necessary to achieve this growth
rate under these constraints? (A negative answer should be
indicated by a minus sign. Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)...

High Flyer, Inc., wishes to maintain a growth rate of 15.75
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What is the dividend payout ratio? (A negative answer
should be indicated by a minus sign. Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Dividend payout ratio
%
What is the maximum...

Sig, Inc., wishes to maintain a growth rate of 12 percent per
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McCormac Co. wishes to maintain a growth rate of 6 percent a
year, a debt-equity ratio of 0.37, and a dividend payout ratio of
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Required: What profit margin must the firm achieve? (Do not round
your intermediate calculations.) rev: 09_17_2012 Multiple Choice
4.71% 16.41% 16.16% 9.24% 8.43%

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debt-equity ratio of 0.34, and a dividend payout ratio of 52
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What profit margin must the firm achieve?
Rentention ratio = 1-0.52 = 0.48
Sustainable growth rate = 0.08 = (ROE) x 0.48) / (1- (ROE x 0.48)
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What must total asset turnover be?
(Enter your answer rounded to 4 decimal places. For
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