You have been the Operations Manager for your company for the last five years and are

preparing to ask for a large raise. You have just learned from a managerial finance

seminar that:

Sustainable Growth Rate $=\%$Profit Margin X $\%$ Retention Ratio X Asset Turnover X

Financial Leverage.

You ask your CFO for the following data:

$20122013201420152016$

$\%$Profit Margin $6\mathrm{.}007\mathrm{.}004\mathrm{.}605\mathrm{.}207\mathrm{.}20$

$\%$ Retention Ratio $99\mathrm{.}50100\mathrm{.}00100\mathrm{.}00100\mathrm{.}00100\mathrm{.}00$

Asset Turnover $1\mathrm{.}332\mathrm{.}021\mathrm{.}922\mathrm{.}072\mathrm{.}64$

Financial leverage $1\mathrm{.}611\mathrm{.}691\mathrm{.}571\mathrm{.}571\mathrm{.}64$

$\%$Growth rate in sales $46\mathrm{.}8084\mathrm{.}6013\mathrm{.}1025\mathrm{.}9057\mathrm{.}10$

Based on the information above, answer the following questions:

$1.$ Calculate the annual sustainable growth rate for each of the above years.

$2.$ Compare the sustainable growth rate with the actual growth rate in sales,

what growth problems did management face over this period?

$3.$ Present the results of your calculations for #$1$ and #$2$ and the analysis

behind it to the CEO.

$4.$ Explain how this data justifies a large raise for the Operations Manager.