Question

The Green Giant has a 6 percent profit margin and a 65 percent dividend payout ratio....

The Green Giant has a 6 percent profit margin and a 65 percent dividend payout ratio. The total asset turnover is 1.5 times and the equity multiplier is 1.6 times. What is the sustainable rate of growth?

Multiple Choice

  • 14.40%

  • 2.40%

  • 5.31%

  • 8.50%

  • 26.00%

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Homework Answers

Answer #1

Profit margin = 0.06

Total assets turnover = 1.5

Equity multiplier = 1.6

As per Du-Pont:

Dividend payout ratio (b) = 0.65

Sustainable Growth rate (SGR) would be:

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