roblem 4-7 Calculating Sustainable Growth [LO3]

The most recent financial statements for Schenkel Co. are shown here:

Income Statement				Balance Sheet
Sales	$	16,800		Current assets	$	12,400		Debt	$	16,900
Costs		10,600		Fixed assets		30,000		Equity		25,500
Taxable income	$	6,200		Total	$	42,400		Total	$	42,400
Taxes (40%)		2,480
Net income	$	3,720

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.

What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Sustainable growth rate