Sustainable Growth Rate Last year Umbrellas Unlimited Corporation had an ROE of 16% and a dividend...
Sustainable Growth Rate Last year Umbrellas Unlimited Corporation had an ROE of 16% and a dividend payout ratio of 40.5%. What is the sustainable growth rate?
Homework Answers
Retention ratio=1-payout ratio
=(1-0.405)=0.595
Sustainable growth rate=(ROE*Retention ratio)/[1-(ROE*Retention ratio)]
=(0.16*0.595)/[1-(0.16*0.595)]
=10.52%(Approx).
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Sustainable Growth Rate Last year Umbrellas
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