Answer: Company 2.

## Explanation To determine the company with the **highest sustainable sales growth**, we need to focus on the components that are sustainable in the long term: - **Volume Growth**: Represents real growth in units sold, which is sustainable if driven by market demand, product quality, or competitive advantages. - **Price Growth**: Represents the ability to increase prices, which can be sustainable if supported by brand strength, pricing power, or inflation. - **Foreign Currency Exchange**: This is typically **not sustainable** as it depends on volatile currency movements and is often beyond the company's control. ### Calculating Sustainable Growth Components: - **Company 1**: Volume (8%) + Price (7%) = **15%** sustainable growth - **Company 2**: Volume (9%) + Price (2%) = **11%** sustainable growth - **Company 3**: Volume (7%) + Price (5%) = **12%** sustainable growth ### Total Sales Growth (Including Currency Effects): - Company 1: 8% + 7% + (-3%) = **12%** - Company 2: 9% + 2% + 3% = **14%** - Company 3: 7% + 5% + 5% = **17%** ### Analysis: - **Company 1** has the highest sustainable growth (15%) despite having negative currency impact - **Company 2** has strong volume growth but lower pricing power - **Company 3** has the highest total growth but much of it comes from favorable currency movements **Company 1** has the highest sustainable growth because it combines strong volume growth (8%) with strong pricing power (7%), giving it 15% of sustainable growth components compared to 11% for Company 2 and 12% for Company 3.

Author: LeetQuiz Editorial Team