Please see attached document with the assignment instructions and rubric. No necessary page length requirement, but only answer the questions provided.
BUS523 Quantitative Analysis for Managers
Sustainable Growth Rate
Due Date: Sunday by 11:59 p.m. EST 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 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.
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.
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.