Impression management theory states that one tries to alter one's perception according to one's goals. In other words, the theory is about how individuals wish to present themselves, but in a way that satisfies their needs and goals.

Explanation:

8 0

2 years ago

High flyer, inc., wishes to maintain a growth rate of 16 percent per year and a debt-equity ratio of 0.90. the profit margin is

Xelga [282]

Answer: The dividend payout ratio is 46.19%.

We follow these steps in order to arrive at the answer:

We begin with the DuPont identity of RoE.

<u>DuPont Identity:</u>

$RoE = Net Profit Margin * Asset Turnover Ratio * Equity Multiplier$

Now,

$Equity Multiplier = \frac{1}{Debt Ratio}$

And Debt Ratio is also expressed as:

$Debt Ratio = \frac{D/E}{1+D/E}$

where D/E represents the Debt-Equity Ratio.

Substituting the value of D/E ratio from the question in the debt ratio formula above we get,

$Debt Ratio = \frac{0.9}{1+0.9}$

$Debt Ratio = \frac{0.9}{1.9}$ ----(1)

Substituting (1) in the equity multiplier formula above we get,

$Equity Multiplier = \frac{1}{\frac{0.9}{1.9}}$

$Equity Multiplier = \frac{1.9}{0.9}$

Substituting Equity Multiplier from above and the relevant numbers from the question in the DuPont identity we get,

$RoE = 0.048 * 1.08 * \frac{1.9}{0.9}$

$RoE = 0.10944$

The relationship between RoE and earnings growth rate g is given by the following formula:

$RoE = \frac{g}{(1-p)}$ , where p is the dividend payout ratio.

Plugging in the values in the formula above we get,

$0.10944 = \frac{0.16}{(1-p)}$

$1-p = \frac{0.16}{0.10944}$

$1-p = 1.461988304$

p = 0.461988304 or 46.19%

3 0

3 years ago

Section 2: Adapting to Changes

s2008m [1.1K]

Answer:

Explanation:

6 0

3 years ago