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NISA [10]
3 years ago
11

otal asset turnover 2.6 Profit margin 6.6 % Equity multiplier 1.5 Payout ratio 25 % What is the sustainable growth rate?

Business
1 answer:
max2010maxim [7]3 years ago
6 0

Answer:Sustainable growth rate =0.19305=19.305%

Explanation:

Sustainable growth rate is calculated as

Return on equity X (1 - dividend payout ratio)

But

Return on equity = profit margin X total asset turnover X equity multiplier

= 6.6% X 2.6 X 1.5

= 0.2574 X 100

=25.74%

The dividend payout ratio is 25% or 0.25

Sustainable growth rate =25.74% X (1-0.25)

=0.2574 X 0.75

=0.19305 X 100

=19.305%

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Both buyers and sellers use the current price as a benchmark. The asking price is a good reflection of current worth, but depending on supply and demand, the actual selling price could be greater or lower.

The current price, often known as the "market price," is the cost that was most recently exchanged for a share or unit of security, coin, good, or precious metal that is traded on an exchange. The market capitalization, or "market cap," of a firm is calculated using the market price per share.

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