ACC501 GDB Solution Spring 2021
ACC501 GDB Solution Spring 2021 #acc501 #Acc501gdb #gb #vu #spring2021
Suppose that Mr. Kareem wants to invest in the stocks of Fazal Corporation. As an investor, he is more interested in knowing that how quickly Fazal Corporation will grow in future. After analyzing the financial statements of Fazal Corporation, he has come up with the following information:
ROA = 12.5%
Net Income = Rs. 750 Million
Total Equity = Rs. 5000 Million
Retention ratio = 60%
Internal growth rate = 8.10%
Now, as the financial consultant of Mr. Kareem, he asks you to calculate the Sustainable Growth Rate of Fazal Corporation. You are also required to explain him why the Sustainable Growth Rate is always greater than the Internal Growth Rate?