The Cornelius Company has an ROE of 12.15 percent and a payout ratio of 30 percent. a.
Question:
The Cornelius Company has an ROE of 12.15 percent and a payout ratio of 30 percent.
a. What is the company’s sustainable growth rate?
b. Can the company’s actual growth rate be different from its sustainable growth rate? Why or why not?
c. How can the company increase its sustainable growth rate?
Step by Step Answer:
a The sustainable growth rate is Sustainable growth rate ROE b1 ROE b where b Retention ratio 1 Payo...View the full answer
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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