Youve collected the following information about Sully Inc Pr

You’ve collected the following information about Sully, Inc.:

Profit margin = 4.33 %

Total asset turnover = 2.40

Total debt ratio = .33

Payout ratio = 18 %

What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate _____ %

What is the ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Return on assets _____%

Solution

debt ratio=0.33

debt/assets=0.33

from above debt/equity=0.33/(1-0.33)=0.49

equity multiplier=(1+0.49)=1.49

return on equity=4.33%*2.40*1.49=15.48%

retention ratio=1-18%=82%

the sustainable growth rate for the company=(15.48%*82%)/(1-(15.48%*82%))=14.54%

ROA=Profit margin*asset turnover =4.33%*2.40

=10.39%

the above is answer..