A Firm Has Net Income of $320,000 on Sales of $3,200,000

question 38

Multiple Choice

A firm has net income of $320,000 on sales of $3,200,000. Its assets total $2,000,000; the equity at the beginning of the year was $1,600,000 and dividends paid were $80,000. What is the sustainable growth rate?

• A) 5%
• B) 15%
• C) 6.25%
• D) 4.69%
• E) none of the above

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Definitions:

Upward Curvature

A geometric shape or line that curves or bends upwards, often used to describe graphs, paths, or surfaces.

Increasing Scatter

A trend where data points spread out over a larger range, indicating higher variability in the data set.

Re-express

A statistical technique used to transform data in order to make its distribution more closely approximate the normal distribution, improving the interpretability or analysis.

Linear Relationship

A relationship between two variables where the change in one variable is directly proportional to the change in another variable.