Based on the following information, what is the sustainable growth rate of Hendrix Guitars, Inc.?

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Quizplus · Accepted Answer

Total debt ratio = 0.66 = TD/TATA/TD = 1/0.661 + TD/TE = 1/0.66D/E = 1/[(1/0.66) - 1] = 1.941176Return on equity = 0.056 F1F1F1S1F1F1F10 1.76 F1F1F1S1F1F1F10 (1 + 1.941176) = 0.289882Retention ratio = 1 - 0.7 = 0.3Sustainable growth rate = (0.289882 F1F1F1S1F1F1F10 0.3)/[1 - (0.289882 F1F1F1S1F1F1F10 0.3)] = 9.52 percent

Based on the Following Information, What Is the Sustainable Growth