Sustainable growth rate: If Newell Corp. has a ROE of 18.6 percent and a dividend payout ratio of 60 percent, what is its sustainable growth rate?

Name: Sustainable growth rate: If Newell Corp. has a ROE of 18.6 percent and a dividend payout ratio of 60 percent, what is its sustainable growth rate?
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Question

Quizplus · Accepted Answer

The sustainable growth rate (SGR) is calculated using the formula: SGR = ROE * (1 - Dividend Payout Ratio). For Newell Corp., SGR = 18.6% * (1 - 0.60) = 18.6% * 0.40 = 7.44%, which is approximately 7.4%.

Sustainable Growth Rate: If Newell Corp