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Stella [2.4K]
3 years ago
7

the company maintains a 40% dividend payout ratio. The net income is $12,493. The total on the balance sheet is $106,900. What i

s the internal growth rate?
Business
1 answer:
PilotLPTM [1.2K]3 years ago
4 0

Internal growth rate is calculated by dividing retained earnings by total assets.

Retained earnings is calculated by subtracting dividends from net income

So: Retained earnings would be 12,493 - (12,493 X .4)

Then to find internal growth rate take your retained earning from above and divide by total assets (the total on the balance sheet : 106,900).

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