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Return on Equity / Growth Rate

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Three companies have the following results during the recent period
K L M
Net profit margin 0.04 0.06 0.1
Total assets turnover 2.2 2 1.4
Total assets / equity 2.4 2.2 1.5

a. Derive for each its return on equity based on the three DuPont components.
B.Given the following earnings and dividends, compute the estimated sustainable growth rate for each firm.

K L M
Earning/Share 2.75 3 4.5
Dividends/share 1.25 1 1

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The solution explains how to calculate the return on equity and the sustainable growth rate.

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