Question: 2 . ( a ) Assuming the following ratios are constant, what is the sustainable growth rate? Total Asset turnover = 2 . 2 0

2.(a) Assuming the following ratios are constant, what is the sustainable growth rate?
Total Asset turnover=2.20
Profit margin=7.4%
Equity Multiplier =1.40
Payout ratio =40%
(b) If the management decides to reinvest 100 per cent of earnings, what is the sustainable growth rate?

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