Walmart wants to achieve a sustainable growth rate of 3.63% and it wants to keep a same dividend payout ratio of 37% and a profit margin of 6%. Suppose that the firm has a capital intensity ratio of 2. What is the debt to equity ratio that is needed to arrive at the firm's desired rate of growth?

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 24E: A company had WACC (weighted average cost of capital) equal to 8. % If the company pays off mortgage...
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Walmart wants to achieve a sustainable growth rate of 3.63% and it wants to keep a same dividend payout ratio
of 37% and a profit margin of 6 %. Suppose that the firm has a capital intensity ratio of 2. What is the debt to
equity ratio that is needed to arrive at the firm's desired rate of growth?
Transcribed Image Text:Walmart wants to achieve a sustainable growth rate of 3.63% and it wants to keep a same dividend payout ratio of 37% and a profit margin of 6 %. Suppose that the firm has a capital intensity ratio of 2. What is the debt to equity ratio that is needed to arrive at the firm's desired rate of growth?
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