Question

Khadimally, Incorporated, expects sales of $763,500 next year. The net profit margin is 5.3 percent and the firm has a dividend payout ratio of 18 percent. What is the projected increase in retained earnings

Answer 1

Based on the expected sales, net profit margin, and dividend payout ratio, the projected increase in retained earnings for Khadimally Inc, is $33,181.71.

What is the projected increase in retained earnings?

First find the expected profit:

= Sales x Net profit margin

= 763,500 x 5.3%

= $40,465.50

The projected increase is:

= 40,465.50 x (1 - 18%)

= $33,181.71

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