Hayesville Corporation had net income of $5 million this year on net sales of $125 million per year.At the beginning of this year,its debt-to-equity ratio was 1.5 and it held $75 million in total liabilities.It paid out $2 million in dividends for the year.What is Hayesville Corporation's sustainable growth rate?
A) 3%
B) 4%
C) 5%
D) 6%

Question

Quizplus · Accepted Answer

ROE_bop × Retention ratio = (5/50)× 0.6 = 6%

Hayesville Corporation Had Net Income of $5 Million This Year