Calculation of growth rate?
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CA Abhishek Singh
(Querist)
06 May 2023
ROE 15% dividend paid 30%
Calculate the growth rate ?
Can anyone solve this ??
Calculate the growth rate ?
Can anyone solve this ??
CA R SEETHARAMAN
(Expert)
06 May 2023
For calculating growth rate this year ROE has to be compared with last year ROE.
Higher dividend might have been paid out of earlier year profit
Higher dividend might have been paid out of earlier year profit
CA Abhishek Singh
(Querist)
07 May 2023
This is the exact question came in IBBI valuation exam. No other information.
CA R SEETHARAMAN
(Expert)
07 May 2023
It can't be calculated without the previous year ROE. It's a tricky question.
CA Abhishek Singh
(Querist)
23 May 2023
I got the answer
Growth rate ( equity) = ROE * retention ratio
Retention ratio = 100-30=70%
Growth rate = 15%*70%= 10.5%
Growth rate ( equity) = ROE * retention ratio
Retention ratio = 100-30=70%
Growth rate = 15%*70%= 10.5%
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