# 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? (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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 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? (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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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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