Harley Davidson, Inc., the iconic motorcycle company, has the following ratios for the years 2000 through 2004:
| 2000 | 2001 | 2002 | 2003 | 2004 |
Profit margin (%) | 11.4 | 12.3 | 13.5 | 15.5 | 16.7 |
Retention ratio (%) | 91.3 | 91.9 | 92.8 | 92.2 | 86.6 |
Asset turnover (X) | 1.25 | 1.14 | 1.11 | 1.00 | 0.97 |
Assets (end of year, millions) | $2,436 | $3,118 | $3,861 | $4,923 | $5,483 |
Equity (end of year, millions) | $1,406 | $1,756 | $2,233 | $2,958 | $3,219 |
Growth rate in sales (%) | 17.8 | 16.4 | 21.4 | 14.0 | 8.5 |
a. Calculate Harley Davidson’s annual sustainable growth rate from 2001 through 2004.
b. Did Harley Davidson have a growth problem in these years?
c. How did Harley Davidson cope with its sustainable growth problems?
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