Question
An analyst following Manhattan Corp. wants to estimate the sustainable growth rate for the company by using the PRAT model. For this purpose, the analyst
An analyst following Manhattan Corp. wants to estimate the sustainable growth rate for the company by using the PRAT model. For this purpose, the analyst has compiled the data in the following table.
Assets and equity values are for the end of the year; the analyst uses averages of beginning and ending balance sheet values in computing ratios based on total assets and shareholders equity. For example average total assets for 2019 would be computed as (147,250 + 139,398)/2. Note: All numbers except for EPS and DPS are in $ millions.
Item | 2019 | 2018 | 2017 | 2016 |
Net income | 18,208 | 17,570 | 14,650 | 13,170 |
Sales | 279,087 | 201,275 | 192,530 | 165,876 |
Total assets | 147,250 | 139,398 | 122,233 | 97,019 |
Shareholders' equity | 97,729 | 68,640 | 63,050 | 48,937 |
EPS | 9.66 | 7.54 | 6.47 | 6.92 |
DPS | 2.33 | 2.02 | 1.64 | 1.9 |
Your task is to compute the average value of the "T" component of PRAT during 2017-2019.
Write your answer in decimal form, and round your answer to 4 decimal places. For example, write 0.0746 instead of 7.46.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started