What is the sustainable growth rate?

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The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales $15,000 Current assets $32,345 Debt $31,878 Costs 9,000 Fixed assets 22,633 Equity 23,100 Taxable income $6,000 Total $54,978 Total $54,978 Taxes (34%) 2,040 Net income $3,960 Assets and costs are proportional to sales. Debt and equity are not.

The company maintains a constant 36 percent dividend payout ratio. No external equity financing is possible.

Required: What is the sustainable growth rate?

Reference no: EM13846070

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