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ki77a [65]
3 years ago
14

A financial analyst is attempting to assess the future dividend policy of Environmental Systems by examining its life cycle. She

anticipates no payout of earnings in the form of cash dividends during the development stage (I). During the growth stage (II), she anticipates 13 percent of earnings will be distributed as dividends. As the firm progresses to the expansion stage (III), the payout ratio will go up to 31 percent and eventually reach 56 percent during the maturity stage (IV).a. Assuming earnings per share will be as follows during each of the four stages, indicate the cash dividend per share (if any) during each stage. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places.) Stage I $ .30Stage II 1.95Stage III 2.80Stage IV 3.40b. Assume in Stage IV that an investor owns 290 shares and is in a 15 percent tax bracket. What will be the investor’s aftertax income from the cash dividend? (Do not round intermediate calculations and round your answer to 2 decimal places.)c. In what two stages is the firm most likely to utilize stock dividends or stock splits? (Select two answers. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
Business
1 answer:
GrogVix [38]3 years ago
5 0

Answer:

Consider the following calculations

Explanation:

A. Dividend per Share = Dividend Payout Ratio * Earnings Per Share

Putting the values given to calculate dividend per share we get,

Stages DPS = Payout Ratio * EPS DPS

Stage 1 =0.00*$0.30                         $0

Stage 2 = 0.13*1.95                         $0.25

Stage 3 =0.31 * $ 2.80                         $0.868

Stage 4 = 0.56*$3.40                         $1.90

b. Calculation of Investors After Tax Income from Cash Dividend:-

Cash Dividend = Number of Shares * DPS in Stage IV

= 290 * $ 1.90

= $552.16

After Tax Income = DIvidend ( 1 - Tax Rate)

= $ 552.16 ( 1- 0.15)

= $ 469.34

C:- In Stage II and Stage III for Growth & Expansion respectively, the firm is likely to utilise stock dividend or stock split.

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Parent Co. invested $1,000,000 in Sub Co. for 25% of its outstanding stock. Sub Co. pays out 40% of net income in dividends each
yawa3891 [41]

Answer:

(A) $110,000

(B) $44,000

(C) $440,000

(D) $176,000

Explanation:

Parent corporation invested $1,000,000 in sub corpora tion for 25% of its outstanding stock

Sub corporation pays out 40% of net income of dividend each year

(A) Parent's Co's share of Sub's Co's net income for the year is $110,000

(B) Parent's Co's share of Sub's Co's share of dividend for the year is $44,000

(C) The total net income can be calculated as follows

= 110,000 ×100/25

= 11,000,000/25

= $440,000

(D) The total dividend for the year can be calculated as follows

= 440,000 ×40/100

= 440,000 × 0.4

= $176,000

5 0
3 years ago
If Abrams Company has an inventory turnover of 7.3 and a receivables turnover of 9.6, approximately how long is its operating cy
Leviafan [203]

Answer:

It is 16.9

Explanation:

Operating cycle = Inventory turnover + Receivable turn over - payable turnover

Hence, Operating cycle = 7.3+9.6

=16.9

Operating cycle implies how long it takes us to convert entire production process to cash .

It has an direct relationship with the level of working capital required. The higher the operating cycle, the higher the working capital investment required to keep the operation running.

A cash driven businesses like restaurant which hardly sell on credit will certainly have shorter operating cycle compared to a manufacturing company.

6 0
3 years ago
At the end of the year, Sheffield Co. has pretax financial income of $616,000. Included in the $616,000 is $78,400 interest inco
SVEN [57.7K]

Answer:

$173,820

Explanation:

pretax financial income $616,000

- interest income on municipal bonds ($78,400)

+ depreciation ($67,200 - $50,400) = $16,800

+ fine for dumping hazardous materials $25,000

taxable income = $579,400

income taxes payable = $579,400 x 30% = $173,820

Fines are not tax deductible, and since depreciation for tax purposes is lower than accounting depreciation, you must add them. But since municipal bonds are not taxable, they must be subtracted.

3 0
3 years ago
A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The required return on the preferred
snow_lady [41]

Answer:

$64

Explanation:

A firm has an annual dividend of $4

The required return is 16%

Therefore the value of the preferred stock can be calculated as follows

= 16/100 × 4

= 0.16 × 4

= 0.64 ×100

= $64

Hence the value of the preferred stock is $64

4 0
3 years ago
Which of the following would be considered an assurance engagement?
yarga [219]

Answer: Option (E)

Explanation:

Assurance engagement tends to refer or mean that an engagement, under which an individual or practitioner tends to express a conclusion, that is designed in order to enhance the level or degree of confidence of user or the intended user, apart from the responsible individual about the result or outcome of measurement or evaluation of the subject matter against the stated criteria.

5 0
3 years ago
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