Part A

Based on the following information, calculate the sustainable growth rate for Raven Drum Inc.:

Profit Margin = 5.3

Total Asset Turnover = 1.6

Total Debt Ratio = 0.45

Payout Ratio = 30%

What is the ROE?

Part B

You've collected the following information about Oscar & Ollie Inc.:

Sales = $165,000

Net Income = $14,800

Dividends = $9,300

Total Debt = $68,000

Total Equity = $51,000

What is the sustainable growth rate? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debtequity ratio? What growth rate could be supported with no outside financing at all?