1. Plowback Ratio = 70% Net Income = $ 1 million Net Assets = $3.4 million...
1. Plowback Ratio = 70%
Net Income = $ 1 million
Net Assets = $3.4 million
Net Liabilities = $2.3 million
What is the Internal Growth Rate? (Round to two decimal points; 2.5 points)
e.g., 12.34% = 12.34
2. Plowback Ratio = 70%
Net Income = $ 1 million
Net Assets = $3.4 million
Net Liabilities = $2.3 million
What is the Sustainable Growth Rate of the Business? (Round to two decimal points; 2.5 points)
e.g., 12.34% = 12.34
Homework Answers
INTERNAL GROWTH RATE=PLOWBACK RATIO*ROA
= 70%*29%
=20.30%
ROA=EARNINGS/ASSETS
=1/3.4
=29%
SUSTAINABLE GROWTH RATE=ROE*RETENTION RATIO
= 90%*70%
=63.63%
ROE=1/3.4-2.3
=.909
Add Answer to:
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