Compute shamrocks roe directly confirm this using the three


The Shamrock Vegetable Company has the following results.

Net sales

$6,000,000

Net total assets

4,000,000

Depreciation

160,000

Net income

400,000

Long-term debt

2,000,000

Equity

1,160,000

Dividends

160,000

a. Compute Shamrock's ROE directly. Confirm this using the three   components.

b. Using the ROE computed in Part a, what is the expected sustainable growth rate for Shamrock?

c. Assuming the firm's net profit margin went to 0.04, what would happen to Shamrock's ROE?

d. Using the ROE in Part c, what is the expected sustainable growth rate? What if dividends were only $40,000?

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Portfolio Management: Compute shamrocks roe directly confirm this using the three
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