Answer:
3.88%
Explanation:
ROA = Net income/Total assets
ROA = $972/$16,127
ROA = 0.0602716
ROA = 6.03%
Retention ratio = 1 - Payout ratio
Retention ratio = 1 - 0.38
Retention ratio = 0.62
Internal growth rate = (ROA*Retention ratio) / [1 - (ROA*Retention ratio)]
Internal growth rate = 0.0602716*0.62 / 1 - (0.0602716*0.62)
Internal growth rate = 0.037368392 / 1-0.037368392
Internal growth rate = 0.037368392/0.962631608
Internal growth rate = 0.038818995
Internal growth rate = 3.88%
Answer:
$76,000
Explanation:
Free cash flow is the cash flow from operating activities minus the capital expenditure.
To obtain free cash flow, the $252,000 planned to add to warehouse for operations will be deducted from the $328,000 expected net cash to be provided by operations as follows:
Free Cash Flow = $328,000 - $252,000
= $76,000
Therefore, the amount of the free cash flow is $76,000.
Note that payment of $25,000 in cash dividend will be included under the financing activities and it is not relevant in calculating the free cash flow amount.
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