BUS523 Quantitative Analysis for Managers: Sustainable Growth Rate | Homework Solution
Sustainable Growth Rate Paper
Due Date: Sunday by 11:59 p.m. EST of Unit 4
Total Points: 100
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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:
- Calculate the annual sustainable growth rate for each of the above
- Compare the sustainable growth rate with the actual growth rate in sales, what growth problems did management face over this period?
- Present the results of your calculations for #1 and #2 and the analysis behind it to the CEO.
- Explain how this data justifies a large raise for the Operations
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
Be sure to read the criteria, by which your assignment will be evaluated, before you write, and again after you write.
Evaluation Rubric for Sustainable Growth Rate 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 are clearly presented, including all key details. | The calculations for year are 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 are clearly presented, including all key details. | The comparison and evaluation are 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 are clear, professional, APA compliant, and error-free. | Few errors that do not impede professional presentation. | Errors impede professional presentation;
guidelines not followed. |
