What is the sustainable growth rate for a firm with $250,000 in net income, $20,000 in preferred stock dividends, $80,000 in common stock dividends, and an average equity balance of $1 million?

Name: What is the sustainable growth rate for a firm with $250,000 in net income, $20,000 in preferred stock dividends, $80,000 in common stock dividends, and an average equity balance of $1 million?
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Question

Quizplus · Accepted Answer

SG = [($250,000 - 20,000 - 80,000)/$250,000] × $250,000/$1m = 0.15, or 15%

What Is the Sustainable Growth Rate for a Firm with $250,000