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Question 31

Essay

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Law Specialists, Ine.
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad Selected financial information
20102011201220132014 Profit margin (%)6.894.940.110.325.25 Retention ratio (%)100.00100.00100.00100.0078.27 Asset turnover (X )2.782.472.032.002.23 Financial leverage (X)1.691.381.161.321.52 Growth rate in sales (%)22.8910.0528.763.5526.19\begin{array}{l}\begin{array}{rrrrr}&2010 & 2011 & 2012 & 2013 & 2014 \\\hline\text { Profit margin \( (\%) \)}&6.89 & 4.94 & 0.11 & 0.32 & 5.25 \\\text { Retention ratio \( (\%) \)}&100.00 & 100.00 & 100.00 & 100.00 & 78.27 \\\text { Asset turnover \( (\mathrm{X} \) )}&2.78 & 2.47 & 2.03 & 2.00 & 2.23 \\\text { Financial leverage \( (\mathrm{X}) \)}&1.69 & 1.38 & 1.16 & 1.32 & 1.52 \\\text { Growth rate in sales \( (\%) \)}&22.89 & -10.05 & -28.76 & 3.55 & 26.19 \\\hline\end{array}\end{array}

-Use Law Specialists's selected financial information above to answer the following questions:
a.Calculate Law Specialists's sustainable growth rate in each year.b.Comparing the company's sustainable growth rate with its actual growth rate in sales,what growth problems did the company face over this period?

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