Who does a firms sustainable growth rate help?
Who does a firms sustainable growth rate help?
Homework Answers
Sustainable growth rate- It is the growth rate that a business can achieve at its max without increasing debt financing. It is the maximum growth rate that a business can sustain without expanding its debt financing. It is not easy to attain Sustainable growth rate.
SGR Formula:
SGR = Retention ratio (1-Dividend payout ratio) * return on equity
Sustainable growth rate helps to company itself, company knows the contribution of its resources in the SGR. Company can figure out that in order to grow rapidly, it should increase its debt financing or should issue additional equity. Sustainable growth rate also identifies the company's life cycle stage, it makes the company able to take decision regarding financing, net income, strategy, dividend payout etc.
Sustainable growth rate
Last year Lakesha’s Lounge Furniture Corporation had an ROE of 18.0 percent and a dividend payout ratio of 23 percent. What is the sustainable growth rate?What is the sustainable growth rate? (Do not round intermediatecalculations. Round your answer to 2 decimal places.)Sustainable growth rate%
1. A firm’s sustainable growth rate can be calculated using the formula Sustainable growth rate =...
1. A firm’s sustainable growth rate can be calculated using the formula Sustainable growth rate = (p(S/A)(1 + D/E) x R) / [1 – (p(S/A)(1 + D/E) x R)] Discuss the relationship between sustainable growth rate and each of the four variables in the above formula. (4 marks)
Which of the following are determinants of a firms sustainable rate of growth? I. Amount of...
Which of the following are determinants of a firms sustainable rate of growth? I. Amount of sales generated from each dollar invested in assets II. Amount of debt per dollar of equity III. Amount of current assets per dollar of current liabilities IV. Percentage of net income distributed as dividends A. I and III only. B. II and IV only. C. I, II and IV only. D. II, III, and IV only E. I, II,III and IV
The sustainable growth rate is equal to:
The sustainable growth rate is equal to:
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total...
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total asset turnover =3.20 Profit marge n =7,4% Equity multiplier 1.4 Payout ratio =60%
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total...
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total asset turnover =3.20 Profit marge n =7,4% Equity multiplier 1.4 Payout ratio =60%
Sustainable Growth [LO3] Based on the following information, calculate the sustainable growth rate for Kaleb’s Heavy...
Sustainable Growth [LO3] Based on the following information, calculate the sustainable growth rate for Kaleb’s Heavy Equipment: Profit margin = 7.3 % Capital intensity ratio = .80 Debt − equity ratio = .95 Net income = $73 , 000 Dividends = $24000
The sustainable growth rate a. is the highest growth rate attainable for a firm that pays...
The sustainable growth rate a. is the highest growth rate attainable for a firm that pays no dividends b. is the highest growth rate attainable for a firm without issuing new stock. c. can never be greater than the return on equity. d. can be increased by decreasing leverage.
What is the Sustainable growth rate? Sig, Inc., wishes to maintain a growth rate of 12...
What is the Sustainable growth
rate?
Sig, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of 43. The profit margin is 5.9 percent, and the ratio of total assets to sales is constant at 1.80 What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded...
What effect does a firm’s dividend payout ratio have on its sustainable growth rate? In particular,...
What effect does a firm’s dividend payout ratio have on its sustainable growth rate? In particular, explain how dividends (arguably,the last line on the income statement as they are subtracted from net income to calculate additions to retained earnings) relates to sales (the top line of the income statement).
What is the Sustainable growth
rate?
Sig, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of 43. The profit margin is 5.9 percent, and the ratio of total assets to sales is constant at 1.80 What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded...
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