[lauxts]

How do I calculate Sustainable Growth Rate with thte following info?
Profit Margin = 8.9%
Capital intensity Ration = .75
Debt-equity ration = .60
Net Income = $34,000
Dividends = $16,000

[ArcSine]

In steps...

Use profit margin and net income to derive total Sales (Profit Margin = Net Income / Sales)

Then with Sales and your Capital Intensity metric you can determine total Assets (Cap Intens = Assets / Sales)

Next, you can determine Equity, using total Assets and the Debt / Equity ratio. (Hint: In the debt/equity ratio, re-write "debt" as "assets minus equity"; so your Debt/Equity ratio becomes (A - E) / E [with A and E representing Assets and Equity, respectively])

Then remember that Return on Equity (ROE) = Net Income / Equity.

The ratio of Dividends to Net Income is the "payout rate", and (1 - payout rate) = the "plowback rate".

To wrap it up, SGR is just the product of ROE and Plowback Rate: SGR = ROE x PB

You furnish the algebraic manipulations at each step, and you'll have it wrapped up pronto.

[lauxts]

Thank you so much! This is exactly what I needed the steps. Thank you and have a great weekend!

[ArcSine]

I'm glad it was helpful... and here's to a terrific weekend!