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    Smith's sustainable growth rate in sales

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    The Smith Company has determined that the following will be true next year:

    T = Ratio of total assets to sales = 1
    P = Net profit margin on sales = 5 %
    d = Dividend payout ratio = 50 %
    L = Debt-equity ratio = 1

    a. What is Smith's sustainable growth rate in sales ?
    b. Can Smith's actual growth rate in sales be different from its sustainable growth rate.
    Why or Why not.

    c. How can Smith's change its sustainable growth ?

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    https://brainmass.com/business/accounting/smith-s-sustainable-growth-rate-in-sales-125861

    Solution Preview

    Sustainable growth rate in sales

    The Smith Company has determined that the following will be true next year:

    T = Ratio of total assets to sales = 1
    P = Net profit margin on sales = 5 %
    d = Dividend payout ratio = 50 %
    L = Debt-equity ratio = 1

    a. What is Smith's sustainable ...

    Solution Summary

    This solution is comprised of a detailed explanation and calculation to calculate Smith's sustainable growth rate in sales.

    $2.19

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