Sustainable Growth Rate You are considering investing in Annie's Eatery.You have been able to locate the following information on the firm: total assets are $50 million,accounts receivable are $6.0 million,ACP is 20 days,net income is $5.5 million,debt-to-equity is 2.5 times,and dividend payout ratio is 55 percent.All sales are on credit.Annie's is considering loosening its credit policy such that ACP will increase to 25 days.The change is expected to increase credit sales by 5 percent.Any change in accounts receivable will be offset with a change in debt.No other balance sheet changes are expected.Annie's profit margin and dividend payout ratio will remain unchanged.Use the DuPont equation to determine how this change in accounts receivable policy will affect Annie's sustainable growth rate.

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The Answer of Sustainable Growth Rate You are considering investing in Annie's Eatery.You have been able to locate the following information on the firm: total assets are $50 million,accounts receivable are $6.0 million,ACP is 20 days,net income is $5.5 million,debt-to-equity is 2.5 times,and dividend payout ratio is 55 percent.All sales are on credit.Annie's is considering loosening its credit policy such that ACP will increase to 25 days.The change is expected to increase credit sales by 5 percent.Any change in accounts receivable will be offset with a change in debt.No other balance sheet changes are expected.Annie's profit margin and dividend payout ratio will remain unchanged.Use the DuPont equation to determine how this change in accounts receivable policy will affect Annie's sustainable growth rate.

Sustainable Growth Rate You Are Considering Investing in Annie's Eatery