Dynamic Communication is a U.S. industrial company with several electronics divisions.

The company has just released its 2023 annual report. Tables 18C and 18D present a summary of Dynamic’s financial statements for the years 2022 and 2023. Selected data from the financial statements for the years 2019 to 2021 are presented in Table 18E. P-69

a. A group of Dynamic shareholders has expressed concern about the zero growth rate of dividends in the last four years and has asked for information about the growth of the company.
Calculate Dynamic’s sustainable growth rates in 2020 and 2023. Your calculations should use beginning-of-year balance sheet data.

b. Determine how the change in Dynamic’s sustainable growth rate (2023 compared to 2020)
was affected by changes in its retention ratio and its financial leverage. (Note: Your calculations should use beginning-of-year balance sheet data.)