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FinanceQ&A LibraryAssume the following ratios are constant: Total asset turnover 2.6 Profit margin 6.6% Equity multiplier 1.5 Payout ratio 25% What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)Question

Asked Oct 14, 2019

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Assume the following ratios are constant: |

Total asset turnover | 2.6 | ||

Profit margin | 6.6 | % | |

Equity multiplier | 1.5 | ||

Payout ratio | 25 | % | |

What is the sustainable growth rate? |

Step 1

The maximum growth which a firm can achieve by using internal resources and fund is known as sustainable growth rate.

Step 2

The formula to calculate return on equity is given below:

Step 3

Substitute 6.6% for profit margin, 2.6 for total as...

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