Question #16 The Grist Mill Company provided the following financial information as of the calendar year...

Question #16 The Grist Mill Company provided the following financial information as of the calendar year 2019:

• Return on Equity of 14.6%

• Return on Assets of 7.8%

• Profit Margin of 8.1%

• Retention Ratio of 72%

Required: Calculate the Internal Growth Rate

Expert Solution

Given in the question,

Return on Assets = 7.8% = 0.078

Retention Ratio = 72% = 0.72

Internal Growth Rate = Return on Assets X Retention Ratio

= 0.078 X 0.72 (Substituting the value from above)

= 0.05616

= 5.616% (Multiplying by 100 to convert to percent)

= 5.62% (Round off to 2 decimal place)

Please give likes for the work. Thanks & Regards.

ekkarill92 answered 2 years ago

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