Harley-Davidson, Inc. has the following ratios for the years 2000 through 2004: 2000 2001 2002 2003 2004 Profit margin (%) 11.4 12.3 13.5 15.5 16.7 Retention ratio (%) 91.3 91.9 92.8 92.2 86.6 Asset turnover (X) 1.25 1.14 1.11 1.00 0.97 Assets (end of year, millions) $2,436 $3,118 $3,861 $4,923 $5,483 Equity (end of year, millions) $1,406 $1,756 $2,233 $2,958 $3,219 Growth rate in sales (%) 17.8 16.4 21.4 14.0 8.5

a. Calculate Harley Davidson's sustainable growth rate for each year.

b. Does Harley Davidson have a growth problem?

c. How did Harley Davidson cope with its sustainable growth problems?

AppendixLO1