All categories

2 years ago

otal asset turnover 2.6 Profit margin 6.6 % Equity multiplier 1.5 Payout ratio 25 % What is the sustainable growth rate?

Business

1 answer:

max2010maxim [7]2 years ago

6 0

Answer:Sustainable growth rate =0.19305=19.305%

Explanation:

Sustainable growth rate is calculated as

Return on equity X (1 - dividend payout ratio)

But

Return on equity = profit margin X total asset turnover X equity multiplier

= 6.6% X 2.6 X 1.5

= 0.2574 X 100

=25.74%

The dividend payout ratio is 25% or 0.25

Sustainable growth rate =25.74% X (1-0.25)

=0.2574 X 0.75

=0.19305 X 100

=19.305%

You might be interested in

Two main reasons a company will market its products are to _____. (Select all that apply)

Leni [432]

Answer:

3. consumers know what is available

Explanation:

3 0

2 years ago

Find the present value of the following stream of cash flows assuming that the firms opportuiny costs is 9 percent. 1-5 years 10

Yanka [14]

Answer:

∑( Cash flow × PVF) = 79,347

Explanation:

Given:

Opportunity cost = 9%

Cash flow for 1-5 years = 10,000

Cash flow for 6-10 years = 16,000

Now,

Present value factor (PVF) = $\frac{\textup{1}}{\textup{(1 + 0.09)^n}}$

here, n is the year

For year 1 to 5

Year Cash flow PVF Cash flow × PVF

1 10000 0.9174 9174

2 10000 0.8417 8417

3 10000 0.7722 7722

4 10000 0.7084 7084

5 10000 0.6499 6499

for years 6 to 10

Year Cash flow PVF Cash flow × PVF

6 16000 0.5963 9540.8

7 16000 0.547 8752

8 16000 0.5019 8030.4

9 16000 0.4604 7366.4

10 16000 0.4224 6758.4

========================================================

∑( Cash flow × PVF) = 79,347

========================================================

taking the PVF to 5 decimal places will make 79,347 ≈ 79,348

8 0

3 years ago

Hunter Manufacturing Inc.'s December 31, 2009, balance sheet showed total common equity of $2,050,000 and 100,000 shares of stoc

Nadya [2.5K]

Answer:

$22.00

Explanation:

Book value per share = Total shareholder equity/ number of share outstanding

Total equity as of 31 Dec 2010 = total common equity at 31 Dec 2009 + net income of 2010 – paid out dividends in 2010 = $2,050,000 + $250,000 - $100,000 = $2,200,000

The book value per share at 12/31/10 = Total equity as of 31 Dec 2010/ number of share outstanding = $2,200,000/ 100,000 = $2200

5 0

2 years ago

When Padgett Properties LLC was formed, Nova contributed land (value of $340,500 and basis of $85,125) and $170,250 cash, and Os

max2010maxim [7]

Answer:

See the explanation below:

Explanation:

a. How is the land recorded for § 704(b) book capital account purposes? For § 704

Debit cash with $170,250

Debit land with $340,500

Credit Nova's Capital account with $510,750

b. What is Padgett's tax basis in the land?

Padgett's tax basis in the land is $85,125 that is carried over.

c. If Padgett sells the land several years later for $510,750, how much tax gain will Nova and Oscar report?

Built in gain = $340,500 - $85,125 = $255,375

Gain from sale = $510,750 - $340,500 = $170,250

Share of gain from sale = $170,250 * 50% = $85,125

Gain to report by Nova = Built in gain + Share of gain from sale = $255,375 + $85,125 = $340,500

Gain to report by Oscar = Share of gain from sale = $170,250 * 50% = $85,125

7 0

3 years ago

Firm Y has issued 500 million shares of stock at $1 par value and $200 millino in additional paid in capital. Retained earnings

aniked [119]

Answer:

Return on equity = 17.46%

Explanation:

DATA:

Issued share capital = $500m

Additional Paid-in capital = $200 million

Retained Earnings = $5.6 billion

Net Income = $1.1 billion

Return on Equity = ?

Solution

Return on equity can be calculated by dividing net income in total shareholder's equity

NOTE: ALL THE WORKINGS ARE IN 1000's

Return on equity = Net Income / Shareholder's Equity

Return on equity = 1,100,000 / (500,000 + 200,000 +5,600,000)

Return on equity = $1,100,000/6,300,000

Return on equity = 17.46%

4 0

3 years ago