Problem 1: Equity Multiplier and Return on Equity: Drake Company has a return on assets of 10.75 percent, total equity of $875,000, and a debt-equity ratio of 0.85. What is the equity multiplier? What is the return on equity? What is the net income?
Problem 2: Sustainable Growth: GTS Corporation has a 12 percent ROE and a 30 percent payout ratio. Calculate its sustainable growth rate.