Weatherford Industries Inc

SUSTAINABLE GROWTH RATE  Weatherford Industries Inc. has the following ratios: A0*/S0 =

1.6; L0*/S0 = 0.4; profit margin = 0.10; and retention ratio = 0.55, or 55%. Sales last year were

$100 million. Assuming that these ratios will remain constant, use the AFN equation to

determine the maximum growth rate (the sustainable growth rate) Weatherford can achieve without having to employ nonspontaneous external funds.