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CORPORATE FINANCE Assignment (doc)

   

Added on  2019-11-08

7 Pages1233 Words188 Views
Running head: CORPORATE FINANCE Corporate FinanceName of the Student: Name of the University: Author’s Note:

1CORPORATE FINANCETable of ContentsAnswer to Question No 1...........................................................................................................2Answer to Question No 2...........................................................................................................3Bibliography...............................................................................................................................6

2CORPORATE FINANCEAnswer to Question No 1Calculation of Sustainable Growth RateFormula: Sustainable Growth Rate= Profit margin* Asset turnover * financial leverage *retention ratioProfit margin= Net Income/RevenuesProfit margin= 7957/94595Profit margin= 0.0841Asset turnover= Revenue/Asset Asset turnover= 94595/42966Asset turnover= 2.2016Financial leverage= Asset/Equity Financial leverage= 42966/4333Financial leverage= 9.9159Retention ratio= Net Income- Dividends/ Net Income Retention ratio= 7957-3404/7957Retention ratio= 0.5722According to the given data of Home Depot, the sustainable growth rate is computed as: Sustainable Growth Rate= 0.0841* 2.2016 * 9.9159 *0.5722Sustainable Growth Rate= 1.0505

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