Puzzles galore has net income of $400, total assets of $2,600, total equity of $1,600, and dividends paid of $35. what is the sustainable rate of growth?

The highest rate of growth that a business or social enterprise may sustain without using more equity or debt to fund expansion is known as the sustainable growth rate (SGR). In other words, it is the rate at which the business may expand without borrowing money from other sources by using only its own internal earnings. The SGR target is to increase sales and revenue while reducing financial leverage. A corporation must avoid financial trouble & excessive leverage by achieving the SGR.

Compute the company's return on equity (ROE) first. By comparing net income to that of shareholders' equity, ROE assesses a company's profitability.

The dividend payment ratio for the corporation is then subtracted from 1. The percentage of earnings per share distributed to shareholders as dividends is known as the dividend payout ratio. The discrepancy should then be multiplied by the company's ROE.

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