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
Related Video
The Dupont analysis is an expanded return on equity formula, calculated by multiplying the net profit margin by the asset turnover by the equity multiplier. The DuPont analysis is also known as the DuPont identity or DuPont model.This Video will guide on how to calculate return on Equity and estimate profitability of shareholders using DuPont Analysis.
Students also viewed these Business questions
-
The Raindrop Company has an ROE of 12.1 percent and a payout ratio of 25 percent. a. What is the companys sustainable growth rate? b. Can the companys actual growth rate be different from its...
-
The Dent Company has an ROE of 13.15 percent and a payout ratio of 30 percent. a. What is the companys sustainable growth rate? b. Can the companys actual growth rate be different from its...
-
The Steiben Company has an ROE of 13.1 percent and a payout ratio of 40 percent. a. What is the companys sustainable growth rate? b. Can the companys actual growth rate be different from its...
-
Develop a data type Quote that implements the following API for quotations: To do so, define a nested class Card that holds one word of the quotation and a link to the next word in the quotation:...
-
A study of full-time emergency medical service (EMS) workers published in the Journal of Allied Health (Fall 2011) found that only about 3% leave their job in order to retire. Assume that the true...
-
Prepare an answer sheet with the following column headings. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net...
-
Survival times (days) of fuel rods in a nuclear reactor are as follows: Test at the 0.01 level of significance whether these data are consistent with the assumption of a log-normal distribution of...
-
Suppose Congress enacted new tax law changes that would (1) permit equipment to be depreciated over a shorter period, (2) lower corporate tax rates, and (3) reinstate the investment tax credit....
-
The number of active Facebook users hit 2.414 billion at the end of June 2019 and 2.498 billion at the end of December 2019. With in months since the start of 2019, let f(r) be the number of active...
-
Roberto Perez is puzzled. His company had a profit margin of 10% in 2014. He feels that this is an indication that the company is doing well. Julie Beck, his accountant, says that more information is...
-
Cheryl Colby, CFO of Charming Florist Ltd., has created the firms pro forma balance sheet for the next fiscal year. Sales are projected to grow by 15 percent to $179.4 million. Current assets, fixed...
-
Firm A and Firm B have debt/total asset ratios of 45 percent and 40 percent and returns on total assets of 7 percent and 8 percent, respectively. Which firm has a greater return on equity?
-
Jiang Company Ltd. Purchases equipment on January 1, 2014, for $387,000 cash. The asset is expected to have a useful life of 12 years and a residual value of$39,000.Jiang prepares financial...
-
What factors motivate healthcare organizations to maintain programs aimed at compliance and corporate ethics?
-
Give a counterexample to show that the converse of the statement is false. If \(m\) is odd, then \(2 m+1\) is also odd.
-
An entity issues 300,000 convertible bonds at the start of year 2010. The bonds have a three-year term, and are issued at par with a face value of EUR 100 per bond, resulting in total proceeds of EUR...
-
Under this Courts state-action immunity doctrine, when a local governmental entity acts pursuant to a clearly articulated and affirmatively expressed state policy to displace competition, it is...
-
State the negation. \(\triangle A B C\) is an isosceles triangle.
-
Select one of the transaction management or concurrency control methods, and explain the primary manner in which the chosen method is used in database management systems. Describe the impact and...
-
What do you think?
-
Cash Flow and Depreciation When evaluating projects, were concerned with only the relevant incremental after tax cash flows. Therefore, because depreciation is a noncash expense, we should ignore its...
-
Erosion in evaluating the Cayenne, would you consider the possible damage to Porsches reputation erosion?
-
Erosion in evaluating the Cayenne, would you consider the possible damage to Porsches reputation erosion?
-
Bailey Delivery Company, Incorporated, was organized in 2021 in Wisconsin. The following transactions occurred during the year: a. Received cash from investors in exchange for 17,000 shares of stock...
-
Write a program (C++) that prompts the user to input an integer and then outputs both the individual digits of the number and the sum of the digits. Example: Input: 3456 Output: 3 4 5 6 Sum of digits...
-
The soil profile at a site consists of 1.5 m of sand underlain by a 6 m thick clay layer. The water table coincides with the top of the sand layer. The saturated unit weight (Ysat) of the sand and...
Study smarter with the SolutionInn App