Studdard Controls recently declared a quarterly dividend of $1.25 payable on Thursday, April 25, to holder of record of Friday,
1 answer:
You might be interested in
Answer:
Maximum Dollar Increase = $10079.76
Explanation:
(See attachment for full question)
INCOME STATEMENT
Sales ---------- $67,000
Costs ---------- $43,800
EBIT ------------ $23,200
Taxes (34%) ----$7,888
Net income ------$15,312
BALANCE SHEET
Current Assets ------$31,000
Fixed Assets --------- $118,000
Total ------------------- $149,000
Long-term Debt -----$68,000
Equity ------------------- $81,000
Total ----------------- $149,000
Dividend Payout Ratio = 30%
Plowback Ratio is calculated by: 1 - Dividend Payout Ratio
Plowback Ratio = 1 - 30%
Plowback Ratio = 1 - 30/100
Plowback Ratio = 1 - 0.3
Plowback Ratio = 0.7
Plowback Ratio = 70/100
Plowback Ratio = 70%
Return on Equity (ROE) is calculated by: Net Income/Total Equity
Net Income = $15,132
Total Equity = $81,000
ROE = $15,132/$81,000
ROE = 0.186815
ROE = 18.68%
Calculating Sustainable Growth Rate (SGR)
SGR = (ROE * Plowback Ratio)/(1 - ROE * Plowback)
SGR = (0.186815 * 0.7)/( 1 - 0.186815 * 0.7)
SGR = (0.1307705)(1-0.1307705)
SGR = 0.1307705/0.8692295
SGR = 0.150444157728194
SGR = 0.1504
Max increase = (Sales * SGR)= ($67,000 * 0.1504)
Max Increase = $10079.75856778905
Max Increase = $10079.76
Book Value Of Asset Book Value of Assets is the asset's value in the books of records of a company or an institution at any given instance.
Assets Book Value Formula = Total Value of an Asset – Depreciation – Other Expenses
Book Value Of Asset is and the fair value of asset exchanged is
As there is a change in the value, this substance exists in the transaction.
Commercial substance exists in business transactions where the outcome is anticipated to change the company's cash flows in the future and is considered only when there is a significant alteration in the risk of cash inflow, the timing of cash inflow, and the amount paid as a result of the transaction.
Learn more about Asset from
#SPJ4