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Nikolay [14]
2 years ago
13

Assume the Crash Davis Driving School has a 13.1 percent ROE and a 30 percent payout ratio. Required: What is the sustainable gr

owth rate?
Business
1 answer:
Tamiku [17]2 years ago
8 0

Answer:

9.17%

Explanation:

sustainable growth rate = return on equity x retention rate

  • return on equity = 13.1%
  • retention rate = 1 - payout rate = 1 - 30% = 0.7

sustainable growth rate = 13.1% x 0.7 = 9.17%

A company's sustainable growth rate is the growth rate that the company can achieve without raising new capital either by issuing debt or stocks. It basically refers to how much the company can finance its current or future projects by investing its retained earnings.

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Valuation Using an Income Statement Multiple JAKKS Pacific Inc., a toy manufacturer, reports net income for the recent twelve mo
mash [69]

Answer:

$16.27

Explanation:

For computing the intrinsic value, first we have to compute the earning per share which is shown below:

Earning per share = (Net income) ÷ (Number of shares outstanding)

                              = ($14.73 million) ÷ (20.05 million shares)

                              = 0.734

Now the intrinsic value would be

= Earning per share × P/E ratio

= 0.734 × 22.17

= $16.27

5 0
2 years ago
Bonita Corporation had net income of $1550000 and paid dividends to common stockholders of $400000 in 2017. The weighted average
artcher [175]

Answer:

16 times

Explanation:

Calculation to determine what Bonita Corporation's price-earnings ratio is

Price-earnings ratio= ($1550000 -$400000)/387500

Price-earnings ratio=$1,150,000/387500

Price-earnings ratio=2.97

Price-earnings ratio= 48/2.97

Price-earnings ratio=16 times

Therefore Bonita Corporation's price-earnings ratio is 16 times

3 0
3 years ago
Suppose the European Central Bank (ECB) decides to use monetary policy to offset the possible inflationary effects of European e
Grace [21]

Answer:

the European Central Bank (ECB) should engage in a contractionary monetary policy

Explanation:

A contractionary monetary policy takes place when a central bank (or the Fed) reduces the money supply in order to cool down the economy, lower inflation rate or like in this case, wants to offset expansionary fiscal policy.

The central bank initially raises the interest rates and starts selling more securities in order to absorb cash from the markets.

7 0
3 years ago
Workplace communication can suffer when individuals
iVinArrow [24]
Lack communication, ignorance, bad behavior
4 0
3 years ago
. In 2000, KFC® and A&W® restaurants successfully merged because each had a strong
klio [65]

Explanation:

Co-branding is a form of branding that connects companies together. Essentially, co-branding is a marketing partnership between two or more businesses.

6 0
3 years ago
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