Dynamo Engines Inc

question 20

Multiple Choice

Dynamo Engines Inc.,has an ROA of 10%,a profit margin of 6%,an assets to equity ratio of 1.30,and a retention ratio of 0.70.What is the firm's sustainable growth rate?

• A)18.57%
• B)9.10%
• C)5.46%
• D)0.55%

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Definitions:

Net Income

The residual income of a company after total revenue has been diminished by all costs and taxes.

Cash Flows

The net amount of cash being transferred into and out of a business, especially considered important for assessing liquidity, flexibility, and overall financial health.

Indirect Method

An approach to preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash from operating activities.

Operating Activities

The section of a business's cash flow statement that accounts for its core business operations' cash inflows and outflows, involving receipts from sales, payments to suppliers, and payroll.