Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.

The most recent financial statements for Live Co. are shown here:

Income Statement		Balance Sheet
Sales	$10,000	Current assets	$21,563	Debt	$21,252
Costs	6,000	Fixed assets	15,089	Equity	15,400
Taxable income	$4,000	Total	$36,652	Total	$36,652
Taxes (33%)	1,320
Net income	$2,680

Required:

What is the sustainable growth rate? (Do not round your intermediate calculations.)

Expert Solution

jeff jeffy answered 2 years ago

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Question

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.

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