Joshua's Antiques has a total asset turnover rate of 1.2,an equity multiplier of 1.4,a profit margin of 5 percent,a retention ratio of 0.8,and total assets of $120,000.What is the sustainable growth rate?
A)6.98 percent
B)7.20 percent
C)7.33 percent
D)7.54 percent
E)7.91 percent

Question

Quizplus · Accepted Answer

Sustainable growth rate = [(0.05 × 1.2 × 1.4) × 0.8]/{1 - [(0.05 × 1.2 × 1.4) × 0.8]} = 7.20 percent

Joshua's Antiques Has a Total Asset Turnover Rate of 1