Stop and Go Has a 4

question 22

Multiple Choice

Stop and Go has a 4.5 percent profit margin and an 18 percent dividend payout ratio.The total asset turnover is 1.6 and the debt-equity ratio is 0.45.What is the sustainable rate of growth?

• A)8.13 percent
• B)8.54 percent
• C)8.89 percent
• D)9.26 percent
• E)9.36 percent

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Definitions:

Unit Product Cost

The cumulative expense of manufacturing a single product unit, encompassing direct materials, direct labor, and overhead costs related to production.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated before the actual costs are known, based on estimated costs.

Overhead Rate

A measure used to allocate overhead costs to products or services, often calculated by dividing total overheads by a base measure such as labor hours or machine hours.

Estimated Labor-Hours

The projected number of labor hours required to complete a batch of goods or provide a service.