Question
Download Solution PDFWhat is the sustainable growth rate of the company that enjoys return on equity = 30 percent and a dividend payout ratio of 40 percent?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is 18 per cent
Key Points Sustainable Growth Rate:
- The maximum rate of growth that a business or social enterprise may maintain without needing to raise more capital or take on more debt is known as the sustainable growth rate (SGR).
- It measures how quickly a business can expand using only internal revenue and without borrowing money from other sources.
Important Points
The sustainable growth rate of the company that enjoys return on equity = 30 percent and a dividend payout ratio of 40 percent is 18%
Last updated on Jun 12, 2025
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