Liz Clairorn Industries has $40 million in shareholders' equity and sales of $150 million last year. a.

Question:

Liz Clairorn Industries has $40 million in shareholders' equity and sales of $150 million last year.
a. Its target ratios are assets to sales, 0.40; net profit margin, 0.07; debt to equity, 0.50; and earnings retention, 0.60. If these ratios correspond to steady state, what is its sustainable growth rate?
b. What would be the sustainable growth rate next year if the company moved from steady state and had the following targets? Assets-to-sales ratio, 0.42; net profit margin, 0.06; debt-to-equity ratio, 0.45; of $5 million; and no new equity financing. Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...