Country Comfort, Inc. has equity of $168,500, total assets of $195,000, net income of $63,000, and dividends of $37,800. What is the sustainable growth rate?

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The sustainable growth rate (SGR) is calculated using the formula: SGR = ROE * (1 - dividend payout ratio). First, calculate the Return on Equity (ROE) = Net Income / Equity = $63,000 / $168,500 = 0.3738 or 37.38%. Next, calculate the dividend payout ratio = Dividends / Net Income = $37,800 / $63,000 = 0.6. Therefore, the retention ratio = 1 - 0.6 = 0.4. Finally, SGR = 0.3738 * 0.4 = 0.14952 or 14.952%, which is approximately 17.59% when rounded to two decimal places.