Better Burgers reported the following numbers (in millions) for the years ending

Question

Better Burgers reported the following numbers (in millions) for the years ending February 2011 and 2012. Requirement 1: What are the internal and sustainable growth rates? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) Internal growth rate Sustainable growth rate Requirement 2: What are the internal and sustainable growth rates using ROE x b and (ROA x b) and the end of period equity (assets)? (Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) Internal growth rate Sustainable growth rate Requirement 3: What are the growth rates if you use the beginning of period equity in this equation? (Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) Internal growth rate Sustainable growth rate

Explanation / Answer

Requirement 1

Requirement 2

Requirement 3

Internal growth rate = Net Income / total assets = 1427/12778 11.17% Sustainable Growth Rate = Net Income / Total Equity = 1427/ 4504 31.68%

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