Assume the following ratios are constant. Total asset turnover Profit margin Equity multiplier Payout ratio = = = = 2.28 5.6% 1.75 37% What is the sustainable growth rate? Note: 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 Profit margin Equity multiplier Payout ratio = = = = 2.28 5.6% 1.75 37% What is the sustainable growth rate? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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![Problem 3-14 Sustainable Growth [LO 3]
Assume the following ratios are constant.
Total asset turnover
Profit margin
Equity multiplier
Payout ratio
=
Sustainable growth rate
=
=
=
2.28
5.6%
1.75
What is the sustainable growth rate?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
37%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F539c3f1d-bc90-4bb8-9779-64c89139d828%2Fca52dccb-61c2-44b2-b625-00ff0811f238%2Ffiwsbcl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 3-14 Sustainable Growth [LO 3]
Assume the following ratios are constant.
Total asset turnover
Profit margin
Equity multiplier
Payout ratio
=
Sustainable growth rate
=
=
=
2.28
5.6%
1.75
What is the sustainable growth rate?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
37%
%
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