Cambria, Inc., had equity of $205,000 at the beginning of the year. At the end o

Question

Cambria, Inc., had equity of $205,000 at the beginning of the year. At the end of the year, the company had total assets of $360,000. During the year the company sold no new equity. Net income for the year was $43,000 and dividends were $6,200.

What is the sustainable growth rate for the company? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

What is the sustainable growth rate if you use the formula ROE

Cambria, Inc., had equity of $205,000 at the beginning of the year. At the end of the year, the company had total assets of $360,000. During the year the company sold no new equity. Net income for the year was $43,000 and dividends were $6,200.

Explanation / Answer

SGR=17.95

ROE = (43000/241800) B= .8558 Use formula

Beginning of period equity = 17.95

(43000/205000)*.8558

End of period equity = 15.21

(43000/241800)*.8558

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