GG Co. shows the following information on its financial statements: interest-bearing debt is $900,000; shareholders’ equity (SE) is $2,500,000; sales are $5,050,000; net income is $685,750; dividends are $200,000; and sales growth (g) is 5 percent. Calculate EFR/S and discuss the relationship between dividend payout and EFR. Calculate the sustainable growth rate for GG Co. Discuss the relationship between profit margin and EFR.
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