Omega Limited has net income of $28 million, earnings before tax of $40 million, earnings before interest and tax of $70 million, gross profit of $100 million, sales of $400 million, assets of $500 million, current liabilities of $50 million, shareholders’ equity of $120 million, dividends of $15 million, shares outstanding of 100 million and share price of $2 per share. Calculate sustainable growth rate ratio?

Question

BlackTom AI · Accepted Answer

To approach the sustainable growth rate, we recall the formula SGR = ROE × retention ratio, where the retention ratio is 1 minus the dividend payout ratio.
Option 1: 13.33% — If we test this, we’d need a ROE and retention combo that multiplies to 0.1333. Given the numbers, ROE = Net Income / Shareholders’ Equity = 28 / 120 ≈ 0.2333. The retention ratio, based on dividends of 15 and net income of 28, is Retention = 1 − (Dividends / Net Income) = 1 − (15 / 28) ≈ 1 − 0.5357 ≈ 0.4643. Multiplying 0.2333 by 0.4643 gives ≈ 0.1083, not 0.1333, so 13.33% is not supported by these figures.
Option 2: 12.50% — This would require SGR ≈ 0.125. With ROE ≈ 0.2333 and retention ≈ 0.4643, the product is about 0.1083. Since 0.1083 ≠ 0.125, this option does not fit the computed values.
Option 3: 13.33% (duplicate) — As explained for Option 1, 0.1333 would demand a different combination of ROE and retention than the given data. The actual product from the inputs is around 0.1083, so this option remains incorrect for the same reason.
Option 4: 10.83% — This matches the straightforward calculation: ROE ≈ 28 / 120 ≈ 0.2333 and Retention ≈ 1 − (15 / 28) ≈ 0.4643. Multiplying 0.2333 by 0.4643 yields ≈ 0.1083, i.e., 10.83%. The numbers align precisely with the standard SGR formula, confirming this as the correct interpretation given the inputs.

类似问题

Given the following information, what is the sustainable growth rate? Total Assets = $1500 Current Liabilities = $396 Long-Term Liabilities = $902 Total Equity = $202 Sales = $644 COGS = $208 Operating Expenses = $310 Net Income = $112 Retained Earnings = $70 Dividends = $42

Suppose a firm has a net profit margin of 20%, sales of $150 million, assets of $300 million, and owner’s equity of $225 million. If the dividend payout ratio is 10%, what is the firm’s sustainable growth rate?

Suppose a firm has a net profit margin of 15%, sales of $155 million, assets of $312 million, and owner’s equity of $223. If the dividend payout ratio is 10%, what is the firm’s sustainable growth rate?

In the context of financial planning models, the planned growth rate is g, the internal growth rate is gi, and the sustainable growth rate is g*. Select the correct alternative:

Last year, a firm reported total assets of $2,000,000, sales of $745,000, net income of $175,000. The firm paid $60,000 in dividends, holding its payout ratio constant. What annual rate of growth can the firm maintain without having to look for external financing?

A company with a return on equity of 15% and a payout ratio of 36% would expect a constant-growth rate of:

Name the Supreme Court decision that removed financial constraints on PACs.

Political scientists Joshua Kalla and David Broockman find that senior policy makers made themselves available to _____ between three and four times more often than they did to constituents.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单