What effect does a firm’s dividend payout ratio have on its sustainable growth rate? In particular,...
What effect does a firm’s dividend payout ratio have on its sustainable growth rate? In particular, explain how dividends (arguably,the last line on the income statement as they are subtracted from net income to calculate additions to retained earnings) relates to sales (the top line of the income statement).
Homework Answers
Sustainable growth rate = ROE * Earnings retention ratio
Higher the dividend payout ratio lower is the retention ratio. Hence the sustainable growth rate is lower.
Higher the sales, higher will be the net income and hence higher will be the dividends. With increase in net income, the profits available for the shareholders will be higher.
Add Answer to:
What effect does a firm’s dividend payout ratio have on its
sustainable growth rate? In particular,...
14. Payout TALI VI 30 percent, what is its sustainable gruwurale. Sustainable Growth [LO3] Based on...
14. Payout TALI VI 30 percent, what is its sustainable gruwurale. Sustainable Growth [LO3] Based on the following information, calculate the sus- tainable growth rate for Kaleb's Heavy Equipment: Profit margin = 7.3% Capital intensity ratio = .80 Debt-equity ratio = .95 Net income = $73,000 Dividends = $24,000 . TYA
Corporation has a dividend payout ratio of 25 percent and a sustainable growth rate of 12...
Corporation has a dividend payout ratio of 25 percent and a sustainable growth rate of 12 percent. What is the company’s return on equity (ROE)
A firm wants a sustainable growth rate of 2.7 percent while maintaining a dividend payout ratio...
A firm wants a sustainable growth rate of 2.7 percent while maintaining a dividend payout ratio of 36 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt–equity ratio that is required to achieve the firm's desired rate of growth?
A firm wants a sustainable growth rate of 3.08 percent while maintaining a dividend payout ratio...
A firm wants a sustainable growth rate of 3.08 percent while maintaining a dividend payout ratio of 26 percent and a profit margin of 5 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? ο ο 74 times ο ο ο
WVU Corporation has a sustainable growth rate of 12.5%, total assets to sales ratio of 1.5,...
WVU Corporation has a sustainable growth rate of 12.5%, total assets to sales ratio of 1.5, profit margin of 10%, and dividend payout of 50%. What is the firm’s target D/E ratio?
A firm wants a sustainable growth rate of 2.78 percent while maintaining a dividend payout ratio...
A firm wants a sustainable growth rate of 2.78 percent while maintaining a dividend payout ratio of 20 percent and a profit margin of 4 percent. The firm has a capital intensity ratio of 2. What is the debt–equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice .80 times .69 times .85 times .31 times .16 times
A firm wants a sustainable growth rate of 2.88 percent while maintaining a dividend payout ratio...
A firm wants a sustainable growth rate of 2.88 percent while maintaining a dividend payout ratio of 22 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice | o .80 times o 78 times o 60 times o 17 times o 20 times
Estimating Growth A firm has a constant dividend payout ratio. Last year the firm had net...
Estimating Growth A firm has a constant dividend payout ratio. Last year the firm had net income of $30 million and paid out dividends of $6 million. The firm's return on equity is expected to be 13% for the foreseeable future. This stock's growth rate in dividends (g) should be
Consider the following income statement for the Heir Jordan Corporation: A 20 percent growth rate in...
Consider the following income statement for the Heir Jordan
Corporation:
A 20 percent growth rate in sales is projected.
Prepare a pro forma income statement assuming costs vary with
sales and the dividend payout ratio is constant. (Input all answers
as positive values. Do not round intermediate calculations.)
What is the projected addition to retained earnings? (Do not
round intermediate calculations.)
Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement Sales Costs $49,000...
3. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these...
3. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean? 4. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EFN for the company assuming the company is operating at full capacity (Hint: beside sales also assume that Costs of goods sold, Other expenses, all company assets and Accounts payable grow with 12%). Can the company's sales increase at this growth rate? S&S AIR, INC. 2012...
14. Payout TALI VI 30 percent, what is its sustainable gruwurale. Sustainable Growth [LO3] Based on the following information, calculate the sus- tainable growth rate for Kaleb's Heavy Equipment: Profit margin = 7.3% Capital intensity ratio = .80 Debt-equity ratio = .95 Net income = $73,000 Dividends = $24,000 . TYA
A firm wants a sustainable growth rate of 3.08 percent while maintaining a dividend payout ratio of 26 percent and a profit margin of 5 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? ο ο 74 times ο ο ο
A firm wants a sustainable growth rate of 2.88 percent while maintaining a dividend payout ratio of 22 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice | o .80 times o 78 times o 60 times o 17 times o 20 times
Estimating Growth A firm has a constant dividend payout ratio. Last year the firm had net income of $30 million and paid out dividends of $6 million. The firm's return on equity is expected to be 13% for the foreseeable future. This stock's growth rate in dividends (g) should be
Consider the following income statement for the Heir Jordan
Corporation:
A 20 percent growth rate in sales is projected.
Prepare a pro forma income statement assuming costs vary with
sales and the dividend payout ratio is constant. (Input all answers
as positive values. Do not round intermediate calculations.)
What is the projected addition to retained earnings? (Do not
round intermediate calculations.)
Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement Sales Costs $49,000...
3. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean? 4. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EFN for the company assuming the company is operating at full capacity (Hint: beside sales also assume that Costs of goods sold, Other expenses, all company assets and Accounts payable grow with 12%). Can the company's sales increase at this growth rate? S&S AIR, INC. 2012...
Most questions answered within 3 hours.
-
In the "Revolutionary Mothers" by Carol Berkin:
Considering traditional gender roles (discussed in Chapter 1 of...
asked 19 seconds from now -
there are 3 questions, please answer to all 3. thank
you.
1)Describe common techniques used to...
asked 14 minutes ago -
The sum of MPC and the MPS must equal 1 because
all additional income must be...
asked 15 minutes ago -
Could you please provide me the answer for following multiple
choice question- subject- Genes, Genomics and...
asked 31 minutes ago -
You have one million $, but for some reason want to earn an
additional $50. Your...
asked 35 minutes ago -
Discuss the fairness of the US Tax Structure? How can it be
improved?
asked 37 minutes ago -
Imagine a roller coaster that starts at the top of a big hill,
and goes immediately...
asked 41 minutes ago -
A 4.0-cm-tall object is 16 cm in front of a diverging lens that
has a -20...
asked 40 minutes ago -
If you can, please answer both questions! Thank you!
1. A wire carries a current of...
asked 1 hour ago -
use both the annuity and the amortization formula.
1.) Sharon is 45 years old and wants...
asked 58 minutes ago -
1)
Decomposition of Ozone
Upon interaction with UV radiation, ozone decomposes into
oxygen, a process described...
asked 57 minutes ago -
Balance and classify the following reactions: combination (C),
decomposition (D), single replacement (SR), double replacement (DR)...
asked 1 hour ago