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

2.7%.

Step-by-step explanation:.

Given:

Net profit margin ( profitability rate) =  15%

Total sales = $155 million

Total assets = $312 million

Total equity = $223 million.

Dividend rate = 10%

Question asked:

What is the firm's sustainable growth rate ?

First of all we will find these thing.

1. Asset utilization rate =

                                     =

2. Financial utilization rate   =  

  Total debt = Total asset - Total equity

                   = $312 million -   $223 million = $89 million

                                           =

3. Return on equity rate = Asset utilization rate profitability rate

Return on equity rate =

4. Business retention rate = 100 - Dividend rate

                                           = 100 - 10 = 90%

Now, finally we will calculate sustainable growth rate :

Sustainable growth rate =  Return on equity rate  Business retention rate

                                        =

Therefore, firm's sustainable growth rate is 2.7%

the correct answer is $7.38

step-by-step explanation:

the answer is a. 72. but i cant answer with less than 20 characters so here's some random text talking about it.