Question: The Stieben firm has estimated that the following will be true next year;
T = Ratio of total assets to sales = 1
P = Net profit margin on sales = 5%
d = Dividend-payout ratio = 50%
L = Debt-equity ratio = 1
[A] Calculate Stieben’s sustainable growth rate in sales?
[B] Can Stieben’s actual growth rate in sales be different from its sustainable growth rate? Explain your reasoning?
[C] How can Stieben change its sustainable growth?