The most recent financial statements for Live Co. are shown here: Income Stateme

Question

The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales $ 18.100 Current assets $12.200 Debt $16.700 Costs 13.900 Fixed assets 29.500 Equity 25.000 Taxable income $ 4.200 Total $41,700 Total $41,700 Taxes (40%) 1.680 Net income $ 2,520 Assets and costs are proportional to sales. Debt and equity are not The company maintains a constant 25 percent dividend payout ratio No external equity financing is possible What is the sustainable growth rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Sustainable growth rate %

Explanation / Answer

Sustainable growth rate = ROE*(1-Dividend payout ratio)

=2520/25000(1-25%)

=7.56%

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