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Sustainable Growth: Total Asset Turnover

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Assuming the following ratios are constant, what is the sustainable growth rate?

Total Asset Turnover = 1.80
Profit Margin = 7.2%
Equity Multiplier = 2.15
Payout Ratio = 30%

I am just not understanding how to do this. The book shows a ROE #, but I don't know how to get that.

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Solution Summary

This solution explains how to achieve sustainable growth.

Solution provided by:
Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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