Final answer:
The required profit margin for the Ramble On Company can be found using the sustainable growth rate formula, but due to the lack of necessary financial information in the provided reference material, we cannot compute the exact profit margin needed.
Step-by-step explanation:
The Ramble On Company must achieve a profit margin to sustain a growth rate, a specific debt-equity ratio, and a dividend payout ratio. To calculate the required profit margin, we can use the sustainable growth rate (SGR) formula:
SGR = Retention Ratio × ROE
where:
- Retention Ratio = 1 - Dividend Payout Ratio
- ROE (Return on Equity) = Net Income / Shareholder's Equity
Since the debt-equity ratio is given, we can express equity as a function of debt, and we know that total assets are the sum of debt and equity. Sales are connected to assets through the total assets to sales ratio. However, the provided reference material isn't relevant to this particular company's financial structure, thus it cannot be used for calculation.
Without the company's financial details, we cannot provide a precise answer to the profit margin needed. Typically, by reorganizing the SGR formula and using the data provided about ratios, one could solve for the profit margin. But in this scenario, because of missing financial details, we are unable to calculate the profit margin for Ramble On Company.