Need help with Sustainable Growth Rate

Due Date: Sunday of Unit 4 Total Points: 100 Instructions:

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:

2012 2013 2014 2015 2016 %Profit Margin 6.00 7.00 4.60 5.20 7.20 % Retention Ratio 99.50 100.00 100.00 100.00 100.00 Asset Turnover 1.33 2.02 1.92 2.07 2.64 Financial leverage 1.61 1.69 1.57 1.57 1.64 %Growth rate in sales 46.80 84.60 13.10 25.90 57.10

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 actual growth rate in sales, what

growth problems did management face over this period? 3. Explain how this data justifies a large raise for the Operations Manager.

Requirements: .

• There is no specific page length requirement, however, all questions posed must be addressed completely.

• All sources used must be properly cited in APA format.

Be sure to read the criteria, by which your assignment will be evaluated, before you write, and again after you write.

BUS522 – Financial Tools for Managers

Unit 4 Assignment: Sustainable Growth Rate

Evaluation Rubric for Unit 4 Assignment

CRITERIA Exemplary Proficient Deficient (14 – 15 Points) (10 – 13 Points) (0 – 9 Points)

Overview of the Sustainable Growth Rate

The overview is clearly presented including all key details.

The overview is presented, though key details may not be clearly or completely presented.

Does not provide the overview or the overview is missing key details.

(23 – 25 Points) (16 – 22 Points) (0 – 15 Points) Calculation of the Annual Sustainable Growth for Each Year

The calculations for year is clearly presented including all key details.

The calculations for year is presented, though key details may not be clearly or completely presented.

Does not provide the calculations for year or is missing key details.

Comparison of the Sustainable Growth Rate with the Actual Growth Rate and Evaluation of Growth Problems

The comparison and evaluation is clearly presented including all key details.

The comparison and evaluation is presented, though key details may not be clearly or completely presented.

Does not provide the comparison and evaluation or is missing key details.

Justification for Large Raise for the Operations Manager

The justification is clearly presented including all key details.

The justification is presented, though key details may not be clearly or completely presented.

Does not provide the justification or the evaluation is missing key details.

(9 – 10 Points) (7 – 8 Points) (0 – 6 Points) Clear and Professional Writing and APA Format

Writing and format is clear, professional, APA compliant, and error free.

Few errors that do not impede professional presentation.

Errors impede professional presentation; guidelines not followed.