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The most recent financial statements for Schenkel Co. are shown here: Income Statement Balance Sheet Sales $ 18,000 Current assets $ 11,900 Debt $ 16,400 Costs 12,100 Fixed assets 28,750 Equity 24,250 Taxable income $ 5,900 Total $ 40,650 Total $ 40,650 Taxes (40%) 2,360 Net income $ 3,540 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. No external equity financing is possible. What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate %

Respuesta :

Answer:  9.60%

Explanation:

[tex]Return\ on\ Equity\ (ROE)=\frac{Net\ Income}{Total\ Equity}[/tex]

[tex]Return\ on\ Equity\ (ROE)=\frac{3,540}{24,250}[/tex]

                                            = 0.1460 or 14.60%

The plow-back ratio, b, is one minus the dividend payout ratio,

b = 1 - 40%

  = 0.60

[tex]Sustainable\ Growth\ Rate=\frac{ROE\times b}{[1-(ROE\times b)]}[/tex]

[tex]Sustainable\ Growth\ Rate=\frac{0.1460\times 0.60}{[1-(0.1460\times 0.60)]}[/tex]

                                                  = 0.0960, or 9.60%

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