Question
Zarqa River Corporation, an electrical company, reported the following ratios for the years 2016 through 2019 as the following: Financial Ratios 2016 2017 2018 2019
Zarqa River Corporation, an electrical company, reported the following ratios for the years 2016 through 2019 as the following:
Financial Ratios | 2016 | 2017 | 2018 | 2019
|
Profit Margin | 12.3% | 13.5% | 15.5% | 16.7% |
Earnings Retention | 91.9% | 92.8% | 92.2% | 86.6% |
Assets Turnover | 1.14 Time | 1.11 Time | 1 Time | 0.97 Time |
Growth Rate in Sales | 16.4% | 21.4% | 14% | 8.5% |
Sustainable Growth Rate | 28.5% | 30.5% | 31.5% | 26% |
The Chief Executive Officer of the company is very concerned about the growth rates, so he asked you as the Financial Manager of the company to indicate if the company has a problem with the sustainable growth rates throughout the four years. If so, how the company coped with this problem.
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