Use this key financial data from the most recent annual report of Rancho, Inc. to answer the questions that follow.

Sales	$12.5 million
Net Income	$ 1.3 million
Total assets	$ 7.6 million
Total equity	$ 5.2 million
Dividends	$0.34 million

1. The firm's CFO wishes to use these data to estimate the firm's sustainable growth rate:

Use the data provided to calculate Rancho's net profit margin. Round your answer to two decimal places.

Use the data provided to calculate Rancho's assets-to-equity ratio. Round your answer to two decimal places.

Use the data provided to calculate Rancho's total asset turnover ratio. Round your answer to two decimal places.

Use the data provided to calculate Rancho's dividend payout ratio. Round your answer to two decimal places.

Use your findings above to determine Rancho's sustainable growth rate. Round your answer to two decimal places.

2. Does this rate of growth ensure shareholder wealth maximization? Yes or no?

3. If the firm's Board feels that it is best for shareholders if the firm grows more slowly, what alterations in each of the baseline assumptions would be good to achieve this objective?

A lower profit margin	Good idea or not a good idea
A decrease in asset turnover	Good idea or not a good idea
A decrease in leverage	Good idea or not a good idea
An increase in the dividend payout ratio	Good idea or not a good idea