Deprey, Inc., had equity of $153,000 at the beginning of the year. At the end of the
Question:
Deprey, Inc., had equity of $153,000 at the beginning of the year. At the end of the year, the company had total assets of $215,000. During the year, the company sold no new equity. Net income for the yearwas $29,000 and dividends were $6,400. What is the sustainable growth rate for the company? What is the sustainable growth rate if you use the formula ROE × b and beginning of period equity? What is the sustainable growth rate if you use end of period equity in this formula? Is this number too high or too low? Why?
Step by Step Answer:
Answer a Sustainable growth rate Change in equity Beginning equity balance 29...View the full answer
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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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.
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