A metric of financial performance known as return on equity (ROE) is obtained by dividing net income by shareholders' equity. Return on Equity (ROE) is a metric that expresses a company's annual return (net income) as a percentage of the value of its total shareholders' equity.
ROI = net income/equity = 7/22 = 31.8181818%
Sustainable growth rate is equal to
(1-(ROE*Retention ratio)/(ROE*Retention ratio)).
=(0.318181818*0.6)/[1-(0.318181818*0.6)]
=0.190909091/[1-0.190909091]
=0.190909091/0.809090909
=23.6% (Approx)
ROE is frequently used to evaluate a business against its rivals and the market as a whole. The formula is especially helpful when comparing businesses in the same sector since it frequently provides reliable indicators of which businesses are conducting their operations with greater financial efficiency.
To know more about ROE click here:-
https://brainly.com/question/16955654
#SPJ4
