? | ? ezto.mheducation.com/hm.tpx 20.00 points The most recent financial stateme

Question

? | ? ezto.mheducation.com/hm.tpx 20.00 points The most recent financial statements for Benkart Manufacturing Co. are shown below Sales Costs 83,000 Current assets 60,000 Fixed assets S 41,000 87.000 S 30,000 Debt 98,000 Equity Taxable income$23,000 Total $128,000 Total S 128,000 Taxes5,750 Net Income $17,250 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible. Required: What is the sustainable growth rate? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g, 32.16).) Sustainable growth rate eBook & Resources eBook 3 4 Internal and Sustainable Growth Check my work Type here to search

Explanation / Answer

Sustainable Growth Rate (SGR) = b * r

where b = balance of retained earnings

r = return on equity

Now b = 1 - dividend payout ratio = 1 - 0.3 = 0.7

r = (Net Income * 100)/ Equity = ($17250 * 100) / $87000 = 19.8276%

Therefore SGR = 0.7 * 19.8276

= 13.88%

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